The Regulation on the Energy Union Governance requires the EU member states to design national energy and climate plans. The implementation of these plans demands the mobilization of significant capital by 2030. Czechia and Latvia introduced a package of financial incentives and fiscal policies to stimulate investment to decarbonize their economies. Still, their impact is not yet sufficient for achieving ambitious energy and climate targets. At the national and local level, know-how on structuring viable projects and experience with significant private capital mobilization are limited and the member states need new knowledge and capacity to raise this capital.
The Climate Investment Capacity project aims to address that challenge and build new capacity in Germany, Latvia and Czechia. The starting point is already existing knowledge and know-how which the project will transfer and adapt to national circumstances with the help of implementing partners.
The central outcome are the skills of the public and financial sector to address the investment challenge in the focus countries. Building on a learning-by-doing approach, the project will produce:
- analyses of investment need to reach the 2030 climate and energy targets,
- investment maps to track public finance and private investment flows into climate and energy transition actions, and
- capital raising plans to close the gap between the need and the current investment flows.
The countries will therefore be in a better position to invest in low-carbon solutions, contributing to successful completion of national plans for the 2030 targets. They will be able to inform the EU policy discourse about their transparency towards the implementation of the EU Energy and Climate Package 2030, international climate commitments e.g. EU “National Determined Contributions” under the Paris Agreement, as well as spending EU and national public budgets on climate-related action. This could inspire the EU level and other EU member states’ decisions on promoting sustainable finance.
Magazinstr. 15-16, 10179 Berlin
Czech Technical University in Prague (CVUT)
Technicka 2, 166 27 Prague 6
Riga Technical University (RTU)
Kalku St. 1, 1658, Riga
T +49 (0) 30 408 18 7028
+420 (224) 355 141
+371 (67) 323 212
|In cooperation with:
CIC2030 project kick-off in Berlin, Germany on 27-28 November 2018
The German Kick-Off served to provide a first fine tuning for the project scope, workplan, and methodological approaches, which could be applied in the project core deliverables in line with the stakeholder interest, e.g. the German development bank KfW, the German Federal Ministry of Economic Affairs and Energy (BMWi), and the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety (BMU).
COP24 Side-Event in Katowice on 10 December 2018
I4CE, Wise Europa, and IKEM hosted the COP24 Side-Event “From domestic climate finance tracking to climate capital investment plans: what’s next in France, Europe and worldwide?” on 10th December 2018. The event presented the existing and emerging practice on tracking climate investment and finance – and how it is being integrated into the policy and planning process.
The event featured an introduction and overview of climate finance landscapes through the case of France by Ian Cochran – Senior Adviser at I4CE followed by an extensive panel discussion with presentations by Maciej Bukowski – President, Wise Europa (Poland), Aleksandra Novikova – Senior Research Associate, IKEM (Germany), Ophélie Risler – Head of Climate Action Department, French Environment Ministry and Richard Baron – Executive Director, 2050 Pathways Project
The kick-off in Prague, the Czech Republic on 15 January 2019
The kick-off meeting in Prague aimed to introduce our project to the key beneficiaries in the Czech Republic, to discuss with them our outputs, and to merge in their expectations, data, and knowledge. Among the stakeholders participating were the Ministries the Environment, the Ministries of Finance and the Ministry of Industry and Trade. Insights from the workshop were the need to shift the energy transition from subsidies provided by EU funds to new innovative financial instruments. In particular, much more efforts have to be given to decarbonize energy supply, the buildings sector, and the transport sector.
The kick-off of the project in Riga, Latvia on 24 January 2019
The kick-off meeting in Riga aimed to introduce our project to the key beneficiaries in Latvia and receive feedback of key project beneficiaries to the scope, methodology and workplan of core deliverables. It furthermore aimed to establish a close cooperation with some of these stakeholders in order to involve them into the co-design of these deliverables. Among the participants were the Ministry the Environment and Regional Development, the Ministry of Finance, and the Ministry of Economics. They emphasized the need to understand how other countries are financing their energy transition and exchange on instruments and patterns that worked well. This was especially for the energy generation and infrastructure as well as the building sector, which are responsible for the majority share of emissions in the country.
Contribution to the EUKI Academy Webinar on 14 February 2019
As a part of the CIC2030 project, Aleksandra Novikova, PhD, held the third EUKI Academy Webinar on the importance of tracking energy and climate investment flows, how it is done and what are the obstacles to tackle. The webinar series is part of the EUKI Academy of the European Climate Initiative and was initiated as a response to various requests from project implementers to offer additional services with regard to capacity development, networking and sharing of information along EUKI-related topics.
On the 14th December, 40 participants followed the analysis of the Energy and climate plans, how climate and energy investment maps (CEIM) can serve tracking public finance and private investment flows and how to develop investment gap & need analyses and capital raising plans. Furthermore, Andreas Schneller / Adelphi spoken about the EBRD’s SlovSEFF as a successful example of a sustainable energy financing facility before the webinar finalized in a discussion with the participants.
Finalization of “Climate and energy investment map of Germany. Status Report 2016” on 28 February 2019
By the end of February 2019, the IKEM’s team finalized the report assessing the status quo of climate and energy investment in Germany for the year 2016. The report features a map illustrating the volume of climate and energy investment flows starting from the sources and intermediaries of finance, through financial instruments used, and recipient sectors including agriculture, buildings, energy, industry, and transport. The map supports the understanding about who invests how much into what kind of measures and it serves as an example for Latvia and Czechia for replicating this exercise.
Finalization of “Assessment of investment needs and gaps in relation to the 2030 climate and energy targets of Germany” on 1 March 2019
The report: “How to Assess Investment Needs and Gaps in Relation to National Climate and Energy Policy Targets? A Manual – and a Case Study for Germany” was completed by the team of Juergens & Rusnok Advisors, as part of the EUKI project consortium. The report contains an overview of different methods for investment needs and gaps analysis, explains their fundamental differences and presents case studies for two sectors in Germany.
Climate finance workshop on 15 March 2019 in Berlin, Germany
On 15 March 2019, we co-organized a workshop on Tracking finance flows and investment needs for the energy and climate transition. The workshop was part of our project as well as part of the project “Landscapes of Climate Finance: Promoting debate on climate finance flows in Central Europe” supported by the European Climate Initiative (EUKI) and conducted by NewClimate Institute, WiseEuropa and I4CE – Institute for Climate Economics.
The workshop goal was the establishment of an exchange on methodologies for tracking climate finance and some new results from climate tracking in France, Germany, Czech Republic, Latvia and Poland. The other goal was the discussion of methodologies for analyzing investment needs, gaps and challenges, with the latest reviews from Germany and France. Finally, it aimed to discuss how climate finance tracking and an improved understanding of investment needs can support different types of decision and policy making, e.g. for processes such as for the National Energy and Climate Plans and Long-term Strategies and working towards long-term alignment with the Paris Agreement.
- Public Notes
- Session 1 – 2016 CEIM Germany – IKEM
- Session 1 – Domestic Climate Investment and Finance-Landscapes
- Session 1 – Domestic Landscape of Climate Finance – WiseEuropa
- Session 1 – Energy and Climate Investment in Czechia – CTU
- Session 1 – National Climate Finance Tracking – CPI – NewClimate Institute
- Session 2 – From the French national low carbon strategy to investment needs – I4CE
- Session 2 – How to assess investment needs and gaps in relation to the 2030 climate and energy targets – IKEM
- Session 3 – Criteria for Paris aligned investing – NewClimate Institute
- Session 3 – Tracking finance flows in the context of Article 2.1c of the Paris Agreement – OECD
Contribution at the Bennett Institute for Public Policy on 3 April 2019 in Cambridge, England
As part of the “Brownbag lunch” series at the Bennett Institute for Public Policy Dr Michaela Valentova held a talk about “Tracking energy and climate investment flows – Climate Investment Capacity 2030”. Special focus was put on the importance on climate tracking and on the coverage of investment flows by the NECPs.
Mapping climate finance: Lessons learned from Czechia and Germany at IAEE 2019 from 25-28 August in Ljubljana, Slovenia
Dr Michaela Valentova of CVUT spoke at the 16th European Conference of the International Association for Energy Economics (IAEE) about the similarities and differences of the Czech and German approach towards financing the energy transition. Thereby, she focused on lessons learned from developing and analyzing German and Czech maps of climate and energy investment.
Contribution to the 16th Technical Working Group of NECPs on 3 July 2019 in Brussels, Belgium
On 18 June 2019, the European Commission published a Communication assessing the drafts of National Energy and Climate Plans (NECPS) of all Member States as a whole, together with specific recommendations and a detailed “Staff Working Document” for each Member State. Following these recommendations, the Member States have to submit their final NECPs until the end of 2019. An important part of NECPs is an assessment of investment needs of energy transition, the current investment, and the analysis of funding sources to address the gap between the investment need and current volumes.
On 3 July 2019, the 16th meeting of the Technical Working Group on NECPs took place in Brussels. Aleksandra Novikova, PhD, contributed to the meeting and presented the lessons learned from Germany, Czechia and Latvia regarding their analysis of financing energy transition.
Contribution to the webinar “Funding models for the energy transition” on 18 November 2019
As a part of the CIC2030 project, Aleksandra Novikova, PhD, contributed to the “Webinar entitled Exploring Different Funding Models for the Energy Transition: Insights from a comparative analysis of the Landscape of Climate Finance in France and Germany”. The webinar series is an activity of the EU Climate Investment and Finance Tracking Group. The group was launched in March 2019 by I4CE, WiseEuropa and NewClimate Institute at an EUKI-supported workshop in Berlin. The objective of this group is to connect and foster the exchange of knowledge and expertise between different types of actors (research, think-tanks, government, among others) on the finance and investment topics related to the low-carbon resilient transformation of European countries.
On the 18th November 2019, the webinar discussed the best practices in assessment of current investment levels and supporting an increase in sustainable financial flows. The experts of I4CE presented the key highlights of the most recent edition of the landscape of climate finance in France. The experts of IKEM discusses the key messages of the climate and energy investment map for Germany. Finally, the experts of these institutions launched a joined publication comparing tracking methodologies and selected results in Germany and France.
- Webinar on Funding Models for the Energy Transition: Landscapes of Climate Finance with the presentations and audio recording.
Conference “Is it time for changes in the Latvian energy sector?” in Riga, Latvia on 27 November 2019
In the energy sector in Latvia in recent years we can observe the implementation of new, innovative and thoughtful projects. One of the last of these is the initiative of “Salaspils Siltums” Ltd. to start using solar energy in district heating. However, at the very core, Latvia is still living the practice and thinking of 10-20 years or even earlier, which has resulted in the energy sector not developing as it could. No one can deny that in Latvia there is still a large potential in this sector that is not used. Is this why we can also call Latvia “a land of unused opportunities”? Yes, we can.
The conference will discuss RTU’s work on modeling and analyzing the energy sector, developing various financial instruments in the energy sector and putting them into practice. The conference will also feature a panel discussing the results of CIC2030 project on investment gap and need analysis involving our expert, Ingmar Juergens.
COP25 Side-Event on Climate finance mapping and planning in Madrid on 6 December 2019
Monitoring past, present, and future public and private spending and investment patterns is essential to achieving climate mitigation and adaptation objectives. Such information helps measure progress, identify gaps, align flows and instruments for maximum impact and scale, and optimize the deployment of public resources in a way that can effectively and efficiently unlock private investment at the transformational scales needed.
The COP25 side-event on Climate finance mapping and planning: challenges and opportunities took place in Hotel Pullman Madrid Airport & Feria in Madrid on 6 December 2016. The workshop shared knowledge and best practices on mapping and tracking flows of domestic climate finance and discuss the ways to ensure this exercise can support investment to achieve climate goals. Aleksandra Novikova, PhD presented the lessons learned from tracking climate finance in Germany, Czechia, and Latvia within CIC2030 project.
Finalization of “Climate and energy investment map for Czechia. Status Report 2017” on 3 December 2019
By the end of 2019, the team of our partner CVUT finalized the report assessing the status quo of climate and energy investment in Czechia for the year 2017. The report features a map illustrating the volume of climate and energy investment flows starting from the sources and intermediaries of investment, through financial instruments used, and recipient sectors. The report focuses on the buildings sector as well as the renewable energy supply and infrastructure sector. The map was featured in the Czech National Energy and Climate Plan.
Contribution to the webinar “Climate Investment & Sustainable Finance: What progress and insights for the CEE region?” on 18 December 2019
As a part of the CIC2030 project, Michaela Valentova, PhD and Agris Kamenders, PhD, contributed to the Webinar entitled “Climate Investment & Sustainable Finance: What progress and insights for the CEE region”. The webinar series is an activity of the EU Climate Investment and Finance Tracking Group. The group was launched in March 2019 by I4CE, WiseEuropa and NewClimate Institute at an EUKI-supported workshop in Berlin. The objective of this group is to connect and foster the exchange of knowledge and expertise between different types of actors (research, think-tanks, government, among others) on the finance and investment topics related to the low-carbon resilient transformation of European countries.
As countries move forward to implement national climate strategies, National Energy and Climate Plans (NECPs) and more broadly Nationally Determined Contributions (NDCs), there is an increasing need to understand how to transform investment needs into capital raising and financing plans. Today countries in Central Europe are moving forward to collect the information and data to support this process. On the 18th December 2019, the webinar looked at the emerging insights from the CEE countries and how they are beginning to track domestic climate investment and finance. Experts will also discuss how CEE countries are integrating this into the climate policy planning process and implementation. the webinar discussed the best practices in assessment of current investment levels and supporting an increase in sustainable financial flows.
- Webinar “Climate Investment & Sustainable Finance: What progress and insights for the CEE region?” with the presentations and audio recording.
Finalization of the map of “Investments in Energy Efficiency and Renewable Energy Projects in Latvia in 2018” on 30 December 2019
By the end of 2019, the team of our partner RTU finalized the report assessing the status quo of climate and energy investment in Latvia for the year 2018. The report features a map illustrating the volume of climate and energy investment flows starting from the sources and intermediaries of investment, through financial instruments used, and recipient sectors. The report focuses on energy efficiency and renewable energy projects in the energy sector, buildings, and businesses.
Finalization of “Investment need and gap analysis for Czechia” on 30 January 2020
In January 2020, the team of our partner CVUT finalized the report assessing investment need and gaps to meet 2030 EU energy and climate targets. The report focuses on the buildings sector as well as the renewable energy supply. In both buildings and renewable energy supply we find a substantial gap between the identified investment flows and estimated investment needs. The results therefore make a clear case for stronger institutional and policy framework in order to reach the 2030 climate and energy targets.
Finalization of “Investment need and gap analysis for Latvia” on 31 January 2020
In January 2020, the team of our partner RTU finalized the report assessing investment need and gaps to meet 2030 EU energy and climate targets. The report provides insights into modeling and investment valuation methods, as well as summarizes information on research conducted to date in Latvia and provides an overview of the amount of investment required to meet the 2030 energy and climate targets. The report focuses on energy efficiency and renewable energy projects in the energy sector, buildings, and businesses.
The National Low-Carbon Investment Network Meeting in Riga, Latvia on 5 March 2020
On 5 March 2020, RTU organized a workshop entitled “Investing into energy and climate projects in Latvia”. Martins Zemitis from the European Commission Representation in Latvia introduced the EU Green Deal and the forthcoming EU legislation in the area of sustainable finance. Boriss Kņigins from the Latvian Ministry of Finance shared the challenges and opportunities for financing climate actions in the next EU programming period 2021-2027. Agris Kamenders of RTU presented estimates of investment needs and current investment into energy transition of Latvia prepared by our project. David Rusnok and Ingmar Jürgens of Climate & Company introduced the methodology developed to prepare a capital raising plan for Latvia. This work will be conducted by our project in 2020.
Climate and energy investment map for Czechia. Status Report 2017
The climate and energy investment map (CEIM) for Czechia aims to inform the discussion on current domestic investment of the country into meeting EU 2030 energy and climate targets. Using data from the year 2017, the report identifies, tracks, and explains the amount of public and private money invested in technologies and other tangible measures in Czechia that lead to GHG emission reduction. The report covers the buildings sector as well as the renewable energy supply and infrastructure sector. It also assesses methodological and data challenges.
Based on the information available, in 2017, at least EUR 688 million was invested in GHG measures in both sectors. Of this volume, EUR 592 million was invested in the decarbonisation of the buildings sector and EUR 96 million was invested in the renewable energy supply and infrastructure sector. If the analysis is conducted by measure, the largest share of the investment volume flowed into energy efficiency representing 63 % of the total tracked investment (EUR 432 million). This exceeds the amount of the investment in renewable energy installations (EUR 172 million), renewable energy infrastructure (EUR 24 million), and fuel switching in buildings (EUR 59 million).
The main source of investment tracked was private investors, consisting of households and corporate actors, which contributed 60 % of the total investment (EUR 406 million). The rest of investment flowed from public sources, mainly from EU Funds and the country’s public budget, including budgets at national, regional, and local levels. Grants offered by public actors played the major role in driving both private and public investment. The main intermediaries assisting in the use of instruments were ministries and their agencies, as well as the capital market.
Climate and energy investment map of Germany. Status Report 2016
The report features a climate and energy investment map (CEIM) of Germany prepared for the year 2016. Prepared through the evaluation of recent data, the map represents climate and energy investment flows starting from the sources of capital and the relevant intermediaries, through instruments used, and recipient sectors. To construct the map, we used a bottom-up approach tracking actual 2016 disbursements at a technology level, aggregating it on sector level and then on country level. The German CEIM 2016 is an update of the German climate finance landscape 2010 developed by Climate Policy Initiative and we made our best to compare the results as well as the methodological and data challenges of these assessments.
Considering the climate-specific investment flows that we were able to trace, we observe a 16% increase in the volume in 2016 (EUR 42.7 billion) relative to 2010 levels (EUR 36.7 billion). These volumes reflect the share of incremental investment in energy efficiency (EUR 8.5 billion), the total investment cost of renewable energy deployment (EUR 25.0 billion), and the total investment cost of non-energy-related mitigation and cross-cutting measures (EUR 9.3 billion). Relative to 2010 investment, the volume of flows to renewable energies decreased by 6%, while the volume of flows to energy efficiency increased by 18%. The private sector accounted for 83% of total investment; the remaining 17% originated in the public sector. Similar to 2010, both low-cost debt and grants offered by public actors played an important role in driving private investment in 2016. Sectors that attracted the largest share of investment were the buildings sector and the energy generation and transmission sector.
Investment Needs and Gap Analysis. A Manual – and Case Study for Germany
How to assess investment needs and gaps in relation to national climate and energy targets? The report by Juergens and Rusnok Advisors addresses this central question by providing a review of existing models and studies. Investment needs assessments are relevant to make long-term investment related decisions, both for the public and private sector. This is particularly the case when market failures and public goods require policy intervention to achieve a socially optimal level and allocation of capital. Investment needs assessments produce insights that can be instrumental in evaluating, legitimizing and motivating respective choices by private and policy decision makers.
To make the best use of model outputs representing, in our case, investment needs related figures, it is important to understand their underlying drivers. Across the different studies which model Germany’s investment needs to reach climate targets in 2030 or 2050, figures range from EUR 24.9 billion to EUR 58.5 billion annually. The wide range is determined by discrepancies in scenarios, and in underlying models and assumptions. This illustrates the importance of understanding the differing frameworks in investment needs assessment studies.
Therefore, the report discusses the different rational and the analytical frameworks in the range of models that are used to analyse investment needs, their key elements and key factors, assumptions, and choices driving their results and outputs. Furthermore, presenting specific insights for Germany by exemplifying prototypes for assessing investment needs for energy efficiency investments in buildings and renewable energy investments in the energy sector.
Map of investments in energy efficiency and renewable energy projects in Latvia 2018
The climate investment flow chart developed by our project allows tracking investment flows in energy efficiency and renewable energy projects in Latvia in 2018. In this report, our aim was to look at how projects have been funded, who have been the biggest investors, how much and in what sectors Latvia has invested in 2018.
Analysing the investments made, it is estimated that in 2018 at least EUR 190 million was invested in energy efficiency measures for buildings and companies, while EUR 41 million was invested in renewable energy measures (including EUR 21.1 million in Daugava HPS).
Currently, EU funds play a major role in financing climate projects. Currently, EU funds are mainly used in the form of grants to invest in state and municipal building renovation projects. Given the high share of grants in project financing, private investment in 2018 was relatively small, accounting for 29% of total investment, while EU funds accounted for 42%, state and local government funding for 29%, including quota trading revenues.
Investment need and gap analysis in Czechia
The report analyses the investment needs to reach the 2030 climate and energy targets in Czechia. It focuses on two sectors: buildings, including sector-integrated renewable energy installations, and renewable energy supply sector, including the appropriate infrastructure necessary for its development. These sectors are key in the low-carbon transition in Czechia.
The annual investment need in the buildings sector is estimated at EUR 1,276 million, including EUR 690 million for renovation in buildings and EUR 586 million for renewable energy sources integrated in buildings. By contrast, the climate and energy investment flows in buildings identified in our previous report amount to EUR 612 million, calling for at least doubling the efforts to reach the 2030 targets.
In renewable energy supply sector, we estimated the investment need at EUR 690 million annually until 2030 (except buildings-integrated installations). This figure compared to the 2017 corresponding investment of EUR 98 million attests a six-fold investment gap. Seemingly, the current system of non-financial and financial support for renewable energy sources, or the setting of parameters of this system, does not lead to sufficient development of renewable energy sources to meet the 2030 targets, and to transform the whole economy towards an efficient, low- carbon system.
Investment need and gap analysis in Latvia
The report assesses the investment needs to reach the 2030 climate and energy targets in Latvia, with a focus on energy efficiency and renewable energy. It reviews existing studies developed for the country and compares their results with the current level of investment.
The report concludes that the difference in investment need estimates mainly relates to the methodologies used, measures included in the scenarios, input data used, and assumptions made. According to the National Energy and Climate Plan published recently, investment need in energy efficiency and renewable measures is EUR 445 million EUR annually over the next 10 years. At present, twice as little is invested into these measures and most of the investment is supported by grants from EU Structural and Investment funds. Therefore, in order to be able to meet Latvia’s climate and energy objectives, it is necessary to double the amount of investment; the involvement of private investment is critical int this process.
- Climate investment capacity (CIC2030):
- Countries: Germany, Latvia, Czechia
- Project duration: 09/2018 – 12/2020
- Implementing Organization: Institute for Climate Protection, Energy and Mobility (IKEM).
- Implementing Partner(s): Czech Technical University in Prague (CVUT) and Riga Technical University (RTU)
- The European Climate Initiative (EUKI): This project is part of the European Climate Initiative (EUKI). EUKI is a project financing instrument by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). The EUKI competition for project ideas is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. It is the overarching goal of the EUKI to foster climate cooperation within the European Union (EU) in order to mitigate greenhouse gas emissions.
The European Climate Initiative (EUKI)
Potsdamer Platz 10
10117 Berlin – Germany
Tel.: +49 (0)30 338424 570
- Project Partner Websites: CIC2030 @CVUT (Czech)CIC2030 @RTU (Latvian)CIC2030 @RTU (English)