Ideas for the future of energy efficiency financing

In the coming years, improving industrial competitiveness implies major investments, notably those that induce a significant reduction of energy consumption of manufacturing processes. Financing major investments in industry, which cover the integration of technological innovations or target incremental improvements of energy performance, seems to be one of the barriers to the development of these projects.

Therefore, the French Environment and Energy Management Agency (ADEME, Agence de l’Environnement et de la Maîtrise de l’Energy) , Axens (licensor in the oil and gas industry), Enea Consulting, GRDF (the main French gas distribution network actor) and GRTgaz (the main French gas transportation network actor) have launched a study that aims to share recommendations to improve industrial energy efficiency financing.

This study differentiates itself from others due to its methodology, relying on interviews with 20 high level decision makers from energy intensive industrials (CFO, CTO …) and 10 decision makers in technological offer and financial offer (technology providers, engineering firms, banks …)

The study details a precise picture of industrial energy efficiency:

• Investment processes as well as operational and functional organisations of industrials regarding energy efficiency
• Barriers and levers of industrials, mainly the risk management practices for the evaluation and follow-up of investments in energy efficiency
• Existing and foreseen financial schemes allowing these kinds of investments

It has concluded in 11 ideas put forth that can improve energy efficiency financing in the industry, split into 4 categories:

• Involve organisations to structure and promote energy performance in industrial projects
• Cover risks to facilitate investments in less energy intensive productive industrial projects, and value energy gains
• Structure financing tools targeting the improvement of energy performance in the industry
• Promote incentive taxation and public support in favour of less energy intensive productive industrial projects

Finally, the steering committee believes that further investigating some of these ideas, in view of later adoption, has the potential to encourage the penetration of more efficient technologies in industry; and thus, begin to significantly reduce industrial energy consumption. In that respect, the steering committee has identified areas that appear the most promising and could be further investigated in dedicated detailed studies as a next step, notably:

• Favour exchanges between organisations by operationally leading a network that makes the connection between energy intensive industries, technological offer and financial offer for industrial energy efficiency
• Support the evolution of the business models of OEMs towards selling less energy intensive solutions
• Foster a service offer based on deconsolidation, to assist industrials in tackling this question
• Set up a mechanism to share the operational risk when integrating an innovative technology
• Set up a mechanism to certify expected energy gains and the associated certification organisations, which is a prerequisite to creating the conditions for confidence by both industrials and investors in expected benefits from less energy intensive productive industrial projects.