CITYnvest

Buildings are responsible for 40% of energy consumption and 36% of CO2 emissions in Europe. By investing in public building renovation, municipalities and regions can improve their energy performance and contribute to the Commission’s objectives to reduce 5-6% of EU energy consumption by 2020.

To get an overview on how local governments and the EU can cooperate on financing energy efficiency in building renovation, we talked to Daiva Matonienė, Member of Šiauliai City Municipal Council (Lithuania) and coordinator of the ENVE Commission at the European Committee of the Regions (CoR). As a former Vice-Minister for the Environment in Lithuania, Ms Matonienė also has a long experience in the area of sustainable buildings at the local and at the national level.

How has your local government found innovative ways to finance energy efficiency in building renovation? 

In my opinion, the local level plays an essential role in sustainable housing. In 2013, the Lithuanian government removed barriers for the creation of a new renovation model which would strengthen municipalities’ role in this area while avoiding financial and administrative burden on households. 

With this new model, municipalities are able to select the most energy-inefficient multi-flat buildings, appoint the legal entity (administrator) that takes loans for the renovation process and provides technical supervision of the construction works. Municipalities can also do their own procurements or go through the centralised system, which is faster. Technical support is very important in procurement and it is provided by an agency owned by the Ministry for the Environment. The Agency participates in providing housing information and supporting design of investment projects.

For a better understanding of financial resources, it is particularly important to have close cooperation between national governments, local governments and professional financial institutions.

Indeed, Lithuania, in close cooperation with the European Investment Bank, has developed an innovative financing scheme- JESSICA Holding Fund - for this Program. JESSICA (Joint European Support for Sustainable Investment in City Areas) is an initiative of the European Commission in cooperation with the European Investment Bank (EIB) and the Council of Europe Development Bank (CEB) that promotes sustainable investment and jobs creation in Europe’s urban areas. The overall aim of the scheme is to contribute to increase energy efficiency in the housing sector by offering long term loan financings at preferential terms and conditions.

Private investment is a crucial source to fund energy efficiency renovations in buildings. How did you manage to attract private investment during your mandate as a vice Minister for the Environment? How did you get local governments involved in this program?

I would like to quote the famous sentence: “In real life, all good ideas are not implemented due to lack of money”. In my opinion this is not true. The world has enough money; what we need is to have a good idea and combined efforts. For example, Lithuania is one of the first countries in the European Union to use the initiative of JESSICA for the improvement of energy efficiency in multi-flat buildings. After renovating the buildings, we saved between 40% and 50% on energy consumption that was concretely translated into -10% in bills to the house owner.

Financial instruments are needed to attract private investments and multiply them. The next program, Jessica II (2014-2020) will guarantee the existence of project planning, of the government program and attract more private investment. Furthermore, a financial instrument will be guaranteed to attract additional funds from private sources (expected leverage of a ratio of 1:5 for each public euro mobilised).

In this domain, like in Lithuanian basketball, we have achieved real cooperation for the implementation of energy efficiency projects. Thanks to professional and active teamwork and close cooperation between national and local level and EIB, now all 60 Lithuanian municipalities will not be observers anymore, but active participants in this programme. Also, the number of banks willing to participate in the program is increasing.

To which extent do you think the solutions adopted in Lithuania for energy efficiency renovations in buildings could be transferred to other regions and local contexts in Europe? 

Unfortunately, there is no one solution for all. Every country is required to make detailed analysis and identify the main barriers in its national context. The “copy-paste” function is not accepted, and it is necessary to find tailor-made solutions. What is most important is to not be afraid to make changes.

Today, the building renovation rate is at 1% across the EU. However, it has been proven that we would need to triple it to achieve a reduction target of 80% of CO2 emissions by 2050 as set by the European Commission. What are the responsibilities of policy and decision makers in the EU to achieve this objective? 

Cooperation and teamwork are the main conditions for success. To achieve greater sustainability, we need to promote dialogue at all levels and to promote cooperation between the EU, national, regional, and local governments.

How can CEMR support your work in the area of energy efficiency renovations in building?

CEMR is an excellent platform to learn, to meet, to see! CEMR’s main contribution in this area is to be the discussion initiator between EU regions. Exchange of best and common practices in different EU regions could be of great support and achieve more efficiency and sustainability at local level. The CITYnvest workshops that took place in Lithuania, Latvia and France, with the participation of local governments, are a clear example of awareness raising and capacity building on the ground.