With a focus on energy efficiency and renewable energies, the report assesses the investment needs needed to meet Latvia's climate and energy targets for 2030. The report examines existing studies relating to Latvia and compares their results with the current level of investment in the country.

The report concludes that the differences in the estimates of investment needs are mainly due to differences in the methodology used, differences in the measures included in the scenarios, differences in the input data used and differences in the assumptions made. According to the recently published National Energy and Climate Plan, the investment requirement for energy efficiency and renewable measures will amount to 445 million euros annually over the next 10 years. Only half as much is currently invested in such measures, with the bulk of the investment being subsidized by grants from the EU's Structural and Investment Funds. In order to be able to meet Latvia's climate and energy goals, a doubling of the investment amount is necessary, which underlines the importance of private investments in achieving this goal.

The report analyzes the investment needs to achieve the climate and energy targets for 2030 in the Czech Republic. It focuses on two sectors: buildings, including sector integrated renewable energy systems, and the renewable energy supply sector, including the related infrastructure necessary for their development. These sectors are central to the low-carbon transition in the Czech Republic.

The annual investment needs in the building sector are estimated at EUR 1,276 million, including EUR 690 million for the renovation of buildings and EUR 586 million for building-integrated renewable energy sources. In contrast, the investment inflows in climate and energy in buildings identified in our last report amount to only EUR 612 million, which requires at least a doubling of efforts to achieve the 2030 targets.

In the field of supply with renewable energies, we have estimated the investment requirement up to 2030 at EUR 690 million annually (excluding building-integrated systems). This figure shows a six-fold investment gap compared to the equivalent investment of 98 million euros in 2017. Apparently, the current system of non-financial and financial support for renewable energy sources or the setting of the parameters of this system is not leading to sufficient development of renewable energy sources to meet the 2030 targets and transform the entire economy into an efficient, low-carbon system.

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.

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.

The climate investment flowchart developed by our project makes it possible to track investment flows in energy efficiency and renewable energy projects in Latvia in 2018. In this report we wanted to examine how the projects were funded, who were the biggest investors and how much and in which sectors Latvia was invested in 2018.

Analyzing the investments made, it is estimated that in 2018 at least 190 million euros were invested in energy efficiency measures for buildings and companies, while 41 million euros were invested in measures for renewable energy (including 21.1 million euros in Daugava HPS).

EU funds play an important role in financing climate projects. Currently, EU funds are mainly used in the form of grants for investments in state and municipal building renovation projects. Given the high share of grants in project finance, private investment was relatively low in 2018, accounting for 29% of total investment, while 42% came from EU funds and 29% from state and municipal funds, including revenue from quota trading.

Combating climate change requires a redistribution of investments in climate-friendly solutions as well as a general increase in investment. As an important element in meeting this challenge in the European Union, the Regulation on Governance of the Energy Union obliges all EU member states to draw up national energy and climate plans (NECPs). These must contain analyzes of ongoing investment flows in the decarbonisation process of the member states.

The German Climate and Energy Investment Map (CEIM) created for 2016 contributes to this discussion. The map shows a snapshot of the climate and energy investment flows. 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.