The built environment is responsible for ~40% of the EU’s carbon emissions (European Commission, 2020). Significant investments are required to implement demand-side, passive, as well as infrastructure-level energy efficiency (EE) measures to reduce these emissions in line with the global temperature rise. While traditional financing is available for new commercial energy efficient buildings, financing additional investments for EE measures in new community buildings –such as affordable group housing and renovation of existing community buildings– is a key challenge. 

Blended finance can be an effective solution to address this gap, by blending public, philanthropic, grant and development finance with mobilised private capital can enable the achievement of financing at scale for such projects. Innovative financing instruments –such as energy saving guarantees, credit guarantees, impact funds, concessional loans, performance based grants, carbon finance coupled with city level policies– can become an effective instrument for financing EE interventions which would otherwise not be financed through traditional financing.

Blended finance can be used to support financing a range of interventions, such as deep renovation. Renewable energy-based cooling and heating systems, or individual adoption of thermal improvement interventions such as energy efficient lighting fixtures or upfront financing for EE interventions in new community buildings. The benefits of blended finance include addressing energy poverty, supporting the renovative wave objective of EU, reducing energy led GHG emissions, acting as a platform for local community, reducing energy bills and increasing awareness as well as supporting energy independence.