The European Union (EU) has set itself ambitious climate change targets. The scale of investment needed to meet the energy savings targets alone is estimated at €180 billion p.a., three quarters of which is accounted for by energy efficiency in buildings. In light of the link between buildings and mortgages, the EU-funded Energy Efficient Mortgages Initiative (EEMI)[1] sought to bridge some of this gap by way of the energy efficient mortgage (EEM) product and framework. However, experience gained indicates the development of the EEM market goes far beyond designing the product and requires the integration of a complex web of stakeholders. The Energy Efficient Mortgage Market Implementation Plan (EeMMIP) will build on efforts to develop EEM by delivering an integrated market and a blueprint for established and emerging markets around the globe. The Project will conduct an analysis of the current market systems relevant to the development of an EEM market and establish demonstrators to support the demonstration of the end-to-end customer journey and EEM life-cycle. It will establish market-based governance and an EEM Label to support recognition of and confidence in EEM and facilitate access to quality information for market participants. It will deliver guidance for the inclusion of energy efficiency in credit risk assessments for lending institutions and supervisors and policy recommendations for the prudential framework in line with the principle of risk sensitivity and promote a well-functioning banking market. Finally, it will support global take-up of EEM through the Label and institutional cooperation. EeMMIP responds to the objectives of the EU in the areas of sustainable finance and climate change, all against the background of Capital Markets Union, and aims to influence the entire value chain, from consumer to bond investor, stimulating mentality change and securing energy efficiency in market attitudes and best practices both in Europe and globally.

The EU green deal and ambitious climate targets of the Nordic governments require massive private investments into energy efficiency of the Nordic building stock, electrification of heating and smart energy systems. Though a substantial part of the needed investments is profitable on paper, they are not actually carried out – an issue labelled the energy efficiency gap. For example, high transaction costs as a result of many points of contacts and lack of intuitive information makes energy renovations complex and unattractive for households. Also, lack of data hampers identification of buildings, which are ripe for energy efficiency renovations. A common denominator for the barriers is that financial institutions are in a perfect position to overcome them, through their touchpoint with end customers and ability to finance the investments. In this project, we will develop and market test concrete solutions to support Nordic financial institutions in overcoming the barriers. In concrete, we will do this by setting up a Nordic hub for Energy Efficient Mortgages, allowing us to leverage the already developed solutions within the initiative and previous research to which many consortium partners have contributed. The developed solutions will be demonstrated and tested in the market by Nordea, Swedbank and Hemma. The ultimate output of the project will be so-called blueprints for financial institutions on how to implement solutions to overcome the identified main barriers to energy renovations. This will be advanced throughout the Nordic banking sector through a comprehensive outreach campaign. The blueprints will showcase the value of a full-scale implementation to financial institutions as they are based on empirical tests within internal systems and response by end-customers. Thus, the blueprints will serve as a script to financial institutions to kick-start the much-needed renovation wave to be on track with the EU green deal as well as national climate targets.

Improving access to long-term finance for Energy Efficiency (EE) projects is key to achieve the EU2030 targets and aligning the COVID-19 recovery to the European Green Deal. However, the lack of standardized disclosure of EE investments limits firms’ access to EE financing. Further, poor understanding of EE information in ESG ratings increases the risk of greenwashing, thus preventing a smooth development of the sustainable finance market. TranspArEEnS addresses these barriers by mainstreaming a quali-quantitative framework for standardized collection and analysis of firms’ EE and ESG information and the development of a standardized EE-ESG rating. This serves as an EE-ESG filter to inform investment and financial policy decisions with regard to portfolios’ alignment to sustainability. A unique added value of this project is to cover non-listed Small and Medium Enterprises, meeting an important market need. TranspArEEnS’ EE-ESG rating will be tested in pilot case studies and capacity building sessions with leading representatives of the financial industry and supervisors. This allows to understand barriers and opportunities for its operationalization in: i) credit risk assessment, ii) development of long-term EE-financing via securitization (covered bonds, European Secured Notes), and iii) introduction of EE-ESG considerations into monetary policies and prudential regulations. By enhancing standardized disclosure of EE investing, TranspArEEnS will decrease uncertainty in the EE and ESG market, thus promoting the scaling up of new EE financing and investment opportunities in the EU. Moreover, it will help to mitigate the risk of greenwashing thus improving financial stability. An excellent Consortium, composed of leading academic, business and financial experts, with the support of key stakeholders in EE and sustainable finance, ensures the policy and market relevance of the project’s results.

Despite some progress has been made in green finance, only a fraction of bank lending and funding (securities) is explicitly classified as green. The lack of standardisation (in terms of reporting definitions and dynamic data sets) hinders transparency, viability and risk assessment and it is thus a major obstacle to the development of the market. There is a huge and urgent need of a standardised approach to “green due diligence”. The EeDaPP Project intends to deliver large-scale, granular technical and financial data related to energy efficient mortgages by way of a standardised data protocol to be accessed through a common, centralised portal. Three key outputs will be: the definition of specific reporting criteria for the gathering of data on energy efficient mortgages; the design and delivery of the standardised protocol for the gathering, processing and disclosing of such data, and the design of a centralised portal; the analysis of data gathered to further integrate ‘green value’ in property valuation and substantiate the correlation between energy efficiency and risk.In this way, the EeDaPP Project builds on and complements the ongoing EeMAP Project, which is intended to design an energy efficient mortgage financing mechanism. The EeDaPP Project will boost the green securities market in terms of size, liquidity and efficiency by providing for the traceability of the performance of energy efficient assets, allowing for the identification of such assets for the purposes of energy efficient covered bond/bond issuance and potentially other derivatives, and by significantly boosting investor confidence in such securities. EeDaPP has also long-term potential to scale-up the expected impacts of the EeMAP Project to encourage significant energy reductions. The EeDaPP Consortium brings together all the necessary competencies (financial, data processing and management, property valuation) to develop a robust, workable and marketable pan-European data protocol & portal.

In the EU, buildings are responsible for 40% of total energy consumption and 36% of CO2 emissions. By improving the energy efficiency (EE) of buildings, the EU’s total energy consumption could be reduced by 5-6% and CO2 emissions by 5%. Considering that the building stock constitutes the largest single energy consumer in the EU, and that the value of the European mortgage market is equal to 53% of EU’s GDP, there is huge potential to bridge financial innovation and the EE world and to unlock the benefits of mortgage financing to support EE to the benefit of all. The EeMAP Project intends to deliver a standardised framework based on a market benchmark to stimulate EE investment by households in the EU’s housing stock by way of a private banking financing mechanism. Three key outputs will be: a framework for a building energy passport, recording the EE history of a property by recognising the improvements made; a framework that can integrate the “green value” of a property through EE and collected market data; the framework for an EE mortgage product. Accordingly, EE investment will become financially viable, as market transparency will be improved. The Project will create synergies in the mortgage and covered bond value chain, delivering a virtuous circle between lenders, borrowers and investors from the origination of the energy efficient mortgage to the pooling of EE collateral for the purpose of energy efficient covered bonds. EeMAP has long-term potential to drive housing markets across Europe in a sustainable manner and encourage significant energy reductions in line with the EU’s aspirations and global climate change demands. Concretely, issuing 35,000 green mortgages a year can achieve savings of 88 GWh per annum. The EeMAP Project brings together all the necessary competencies (financial, building and EE, property valuation, energy provision and data) to develop a credible, workable and marketable pan-European energy efficient mortgage initiative.