US banks own up to energy efficiency failings

  

Banking officials at a conference in New York City have reportedly admitted that despite their statements about the importance of energy savings, they are reluctant to lend money in practice.

Green soundings from banks such as JP Morgan Chase may be flavour of the month but in reality, “We don’t have a lot to show for it,” Granville Martin, the bank’s executive director of environmental affairs told a panel meeting at the Advanced Energy conference, according to the Greentech Efficiency website.

“There’s just a lack of organic demand,” he said.

A lack of public education has depressed consumer demand for energy efficiency loans and a lack of data from potential lenders appears to be pushing banks to sit on their cash reserves. 

“We’re trying to sell Kool-Aid, but people won’t drink the Kool-Aid because there’s insufficient information to make decisions on it,” Jeff Pitkin of the New York State Energy Research and Development Authority (NYSERDA) was quoted as saying.

The authority, which issues tens of millions of dollars in energy efficiency loans, wants to bundle such packages in the same way as auto-companies like Mercedes-Benz, and lease them to institutional investors.

But in the aftermath of the housing market collapse of 2008, banks are still twitchy about lending to customers who cannot provide prior investment histories.

As a result, a publicly-funded $30-million ‘resiliency retrofit fund’ to encourage lending for energy efficiency building retrofits in areas hit by Hurricane Sandy last winter is now in the pipeline.

Market uncertainties

Where energy saving investments from the banking sector were concerned, “the uncertainty of that market is a fundamental stumbling block,” Martin said.

The Bank of America and Merrill Lynch recently released a global energy efficiency stock list which ranks stocks according to “the level and materiality of companies exposure to energy efficiency,” across several sectors.

It notes a governmental trend towards energy efficiency measures, but cautions that the most attractive investments are those where energy savings products and services are already at the core of a business.

The most attractive sector, it notes, is building. The global market for energy efficient building technologies has been slated to rise to $103.5 billion in 2017 by Pike Research.

Interestingly, the US public sector's energy efficiency record compares well to Europe's.

Europe falls behind in energy savings race

The State of New York is considering a $1-billion green bank that will dwarf the EU’s Energy Efficiency Facility (EEEF), which was launched in 2011 with funds of just over €200 million.

Here too, private-sector involvement was limited with just one €5-million contribution to the EEEF from Deutsche Bank, which agreed to act as the fund’s investment manager.

In a letter to the European Commission earlier this week, Stephane Arditi of the European Environment Bureau warned that “in the USA, about ten times more resources are dedicated to [energy saving] policies.”

As a result of improved minimum energy performance standards, labelling and green procurement schemes abroad, “Europe may be quickly caught up and surpassed by more dynamic economies,” he warned.

Scare stories in EU countries such as the UK about smart grids operating as a “big brother” regime may be contributing to public apathy about energy saving measures.

On 27 April, the Daily Mail warned that “the National Grid is demanding that all new appliances be fitted with sensors that could shut them down when the UK’s generators struggle to meet demand for electricity.”

Timeline: 
  • 2014: EU pledged to review progress towards energy efficiency 2020 targets and consider binding measures if it is too slow.
  • 9 July 2015: Deadline for threshold raising energy performance requirement on public buildings to 250m2.
  • 2016: European Commission to review the Energy Efficiency Directive.
  • 1 Jan. 2019: Deadline for all new public buildings to become near-zero CO2 emitters
  • 2020: Deadline for EU states to meet voluntary obligation to reduce energy output by 20%, measured against 2005 levels.
  • 1 Jan. 2021: Deadline for all new buildings to become near-zero carbon emitters
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