The role of Energy Efficiency Fund and Energy Saving Insurance in the Energy Efficiency and Environment Market

The role of Energy Efficiency Fund and Energy Saving Insurance in the Energy Efficiency and Environment Market

(Technical Note No. 1: The Experience of China) By: Mohammad Keivanfar Based on the available evidence, the operation of an energy-saving market model that aims to issue energy saving certificates is impossible without financing sources and insurance components. Unfortunately, due to the lower return on investment for the energy efficiency market in Iran, it is more complicated to attract the engagement of banks and financial institutions to provide financial resources.

Therefore, it must be accepted that the implementation of the energy efficiency market model in Iran will be possible only with sufficient and rational financial resources. In this regard, according to the studies in some developed countries, the role of insurance as a risk mitigator is discussed in various cases. However, the role of such enablers in the field of energy efficiency market is undoubted as an initiator and not a facilitator. Based on the proven experiences, energy-saving insurance will play a role as the beginner of the energy efficiency market process, and also beyond guaranteeing energy saving, it will secure and guarantee the survival of the system and the designed efficiency market model.

Reviewing the experiences of some developed and developing countries is on the agenda of the Energy Efficiency and Environment in Building (EEEB) Project to facilitate the use of these key institutions in the Iranian Energy Efficiency and Environment Market through the national model. The first experiment to be studied is the China Energy Supply Efficiency Program (CHUEE). This Chinese program with a total budget of $ 790 million has been implemented in 226 projects since 2006. The main activity in this program was to reduce risks of investment for institutions and banks. In China, when it comes to financing sustainable energy loans, Chinese banks usually accepted credit risk by considering fixed assets as collateral. However, this was possible for some smaller companies. The program focused on building the capacity of a financial institution and reducing the risk of investing in sustainable energy. Within the program, the consultancy services to the financial institutions have been considered and a group of experts supported them to develop their portfolios in the field of local energy efficiency and renewable energy projects and ensure the profitability of these projects. For more information see the below link:

https://unfccc.int/climate-action/momentum-for-change/activity-database/momentum-for-change-ifc-china-utility-based-energy-efficiency-chuee-program.

 

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