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Dynamic Funding Programs for more efficient CO2 reduction in the Building Sector

Aktualisiert: 27. Okt. 2021

„Collectively, buildings in the EU are responsible for 40% of our energy consumption and 36% of greenhouse gas emissions, which mainly stem from construction, usage, renovation and demolition."

[Source: EU commission „In focus: Energy efficiency in buildings”]


Financing actions against climate crisis is worth every funding ...



The influence of buildings on our climate is incredibly high and so is the willingness to invest in more sustainability in the sector.

Surveys show that already today, a third of private investors are looking for sustainable investments that aim for the wellbeing of our climate and environment. It has become more and more apparent that investments in nature and climate protection are cheaper than the expected expenses for covering damages directly caused by climate change.

In all, we can see that these comparatively still "small" sums of money placed for more energy efficiency and CO2 reductions are well invested, considering what climate change and inefficient practices in real estate are currently costing us and will cost us in the future.



... but the classic funding approach does not achieve enough progress.



Large banks and private investors, entire cities, municipalities and states are already offering funding programs that, in cooperation with real estate participants, aim to save emissions through energy efficiency programs. However, the ongoing funding approach of these programs is static, outdated and shows lots of potential for improvement.

Classic funding programs for building and energy efficiency measures and CO2 reduction, only reward implemented measures, but not achieved results. Funding is allocated according to the watering can principle where all participants with the same measures receive the same funding, regardless if their savings and efficiency targets are met.


This results in a lack of incentives for participants to do and achieve more. Main issues:

  1. Success is defined through a funded measure but not as an achieved emission reduction.

  2. No incentive to overachieve. All program participants receive the "same" funding. (Funding of the measure - not the target).

  3. Final emission reduction targets are not measured. No one knows about the net outcome of the program.



Illustration of static funding programs today: no rewards for achieved reductions on CO2 emissions

The current outdated approach also results in the following disadvantages:

  • The funding does not directly correlate to the emission target to be achieved. It rather signals the “hope” to get there.

  • The use of estimated CO2 reductions detracts from the actual net numbers. It’s impossible to know what has been achieved.

  • Rebound effect: The promises that come along with new technologies often offset their positive effects. Without empirical feedback, their newly delivered comfort is over-compensated by excessive consumption. Structural efficiency measures as part of building refurbishment can be negatively affected or even levelled out by incorrect ventilation and heating caused by careless technology-trusting-behaviour.

  • Standardised emission reductions are often calculated under non-realistic, optimised conditions.

  • Self-fulfillment: Climate change can in some contexts create less need for some energy usage, e. g. heating.

  • Lower heat consumption may have other reasons: Weather adjustments are needed when comparing different winters with different conditions, such as higher temperatures from November to March. How high are the net savings in reality?

  • It is estimated that without incentives on CO2 reductions, only 50 % of the projected numbers can be met.


The classical funding approach mainly addresses the cost of entry for carbon reducing measures but does not aim to achieve a specific amount of CO2 reduction. Furthermore, it does not create motivation to achieve/over-achieve emission reduction targets. Therefore, today we only see an administration of funding but no race for climate protection. This will not be enough to reach the targets of Paris Agreement.



For all these reasons, ETA+ has addressed the question:


"How can funding programs be improved and offer more incentives in the future?"


Competition to save climate: Innovative dynamic funding rewards achieved and measurable emission reductions.



The new and innovative approach to dynamic funding programs is intended to reduce the disadvantages of classical programs as far as possible and thus offer added value for all participants. In contrast to the classic approach of the watering can principle (100% of funding volume for all measures), the new funding model places part of the core funds and creates additional rewards for successful participants through the following gradation in 3 steps:


  1. As basic support, 50-70% of the investment fund is distributed to all participants for the measures.

  2. A further 15-25% of the fund is distributed as a promotion bonus to the top 30% of participants with the highest measured CO2 savings.

  3. The remaining 15-25% of the fund will be distributed as a profit incentive to the top 50-100 savings projects with the highest measured CO2 savings.

Based on this logic the most successful reducers of emissions receive public funding of up to 70-80% of their total investment, whereas low performers just receive the regular subsidy. The total funding volume stays the same but reaches an estimated 15-30% higher effect of CO2 reduction and climate protection.



Illustration of dynamic funding programs: high rewards for achieved reductions on CO2 emissions

The key success factors of the new dynamic funding approach are:

  • The main objective of the funding is to maximize CO2 emission reductions - no longer just paying only for initial measures to (hopefully) achieve them.

  • The effect of the funding program is metered digitally and automatically by IoT meters and sensors, which send their data to a central platform which saves, evaluates and aggregates data for all stakeholders.

  • Transparency: For funding participants, sponsors and banks, the achieved results are always only a click away.

  • Motivation to change people's emission-creation behaviour: Rankings and financial bonuses motivate participants to ensure emission reductions by adjusting and further understanding their consumption behaviour.

  • Competition for the top-performing emission reductions between all participants through high bonuses and ongoing ranking.

  • Motivate others to join climate protection funding by communicating, honouring and celebrating the winners.



Benefits of the dynamic funding program are clear to funding participants and sponsors, as well as for our environment:

  • Participants receive a higher incentive bonus for higher savings, are encouraged towards more transparent practices about their energy consumption and, in best case, fun in the competition.

  • Successful participants can strengthen their environmental image through certification and attestation: the results of this funding model can be communicated externally and help involve all stakeholders.

  • The funding sponsor (investor) gets real measured CO2 emission reductions and a higher effect for the same funding amount. There is only a minimal additional cost.

  • Climate action tracking: The ambitious targets of the building sector from the Paris Agreement are place within reach and can gradually be met with corresponding funding.



Setting up and operating dynamic funding programs on an existing digital platform: Made easy with ETA+!



The open and digital ETA+ platform for energy and building management can be the key element for the setup and operation of dynamic funding programs. We already enable energy efficiency and CO2 reduction in the building sector.

The platform works as a technical enabler for the dynamic approach and delivers immediate transparency on achievements for all stakeholders:

  • The ETA+ platform supports all energy and building types and their digital images (Digital Twins).

  • The logic and architecture of our platform are specialized for buildings and infrastructure.

  • Collected data is transformed into valuable information and aggregated to any needed KPI and format (tables, graphs, automated reports).

  • The ETA+ platform is available as a white-label solution and can be operated for every provider and brand.

  • Our customers have already achieved significant CO2 reductions and cost savings by using our platform and expertise.

  • Our platform can integrate almost all standard IoT devices, meters and gateways.


We are ready to protect our climate the best way - how about you? Let's do it together!


Interested?

Contact our team by phone or the contact form on our website and benefit from extensive advice on various topics.


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