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Over 1,000 high-level representatives from government, business, civil society and international organizations gathered in New York City from April 3-5, 2017 for the 3^rd Sustainable Energy for All Forum – its theme “Going Further, Faster – Together.”

The Building Efficiency Accelerator was well-represented at the event: Nine BEA cities and 18 BEA partner organizations were present, totaling nearly 50 people. The BEA had a packed agenda over the three days, including leading a session with cities and finance experts on financing urban building efficiency and conducting a training on how cities can get their building efficiency priorities funded. Additionally, cities provided updates and feedback on BEA progress. Please contact us for any additional information about any portion of the agenda from the BEA events around the SEforALL Forum.

The following cities and organizations attended BEA events at the SEforALL Forum:

Cities:

• Belgrade, Serbia
• Bogotá, Colombia
• Eskişehir, Turkey
• Mérida, Mexico
• Mexico City, Mexico
• Rajkot, India
• Santa Rosa, Philippines
• Tshwane, South Africa
• Warsaw, Poland

Organizations:

• Alliance to Save Energy
• C40 Cities
• Carbon Trust
• Copenhagen Centre on Energy Efficiency (C2E2)
• Danfoss
• Global Environment Facility (GEF)
• ICLEI – Local Governments for Sustainability
• International Energy Agency (IEA)
• International Finance Corporation (IFC)
• Investor Confidence Project
• Johnson Controls
• Pacific Northwest National Laboratory (PNNL)
• Philips
• Tecnalia
• UN Environment
• United Nations Foundation
• US Green Building Council (USGBC)
• World Resources Institute

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The most common channel for financing retrofits of publicly owned buildings is internal budgeting. However, this is often a challenge, as many retrofits have a long pay-back period and many cities only have the legal authority to budget for one year. Additionally, city agencies may find that, as a result of lower energy bills in one year, their budgets are lowered in subsequent years. If internal budgeting is not a viable option, cities may seek external resources to finance their building efficiency projects. However, the market for energy efficiency retrofits is often not mature enough to attract the level of investment needed.

On August 6^th, nearly 100 participants with both international and domestic backgrounds gathered in Mexico City to explore options for overcoming these financial barriers to implementing energy retrofits in Mexico City’s municipal buildings. From internal strategies to public policy, these innovative solutions have the potential to make Mexico City’s buildings leaders in energy efficiency.

Adapting Existing Budgeting and Financing Options for Municipal Retrofits

Agencies in Mexico City should consider utilizing existing legal and financial mechanisms to invest in energy efficiency retrofits.  For example:

• Agencies may be able to establish contracts with terms exceeding one year, which would facilitate multi-year agreements with energy services companies.
• Mexico City should explore the potential for public-private partnerships. In such a partnership, government agencies would maintain ownership of the building, but the operation of the building, including energy efficiency retrofits and energy management, is transferred to a private sector operator who would receive compensation.
• Existing funds, such as Mexico’s national infrastructure fund FONADIN, may be potential sources for financing energy efficiency.  FONADIN’s purpose is to support projects that generate public benefits but are not attractive enough for the private sector to support.

Mobilizing External Sources of Funding

Municipal governments should also focus on making projects more financially attractive to investors. Two potential ways to accomplish this are:

• Support the development of an energy services market for both municipal and private buildings. While the energy services company (ESCO) model has successfully catalyzed energy efficiency investments in markets such as China and the United States—where energy savings are used as collateral to finance retrofits—the model has not yet matured in Mexico. This is partially due to uncertainty around repayment, which poses a risk to financial institutions. More third party auditors are needed in Mexico to conduct credible assessments of energy savings so that cities and building owners have accurate, reliable information about how much energy has been saved. Fortunately, efforts are underway to train and certify more auditors in Mexico. In addition, standardizing the documents needed for projects and bundling projects will better enable financial decision makers to assess them.
• Explore the creation of an energy efficiency trust fund, drawing on current trust funds in Mexico for examples. Such a trust fund could aggregate multiple energy efficiency projects, reducing overall risk and transaction cost, consequently making projects more attractive to external investors. This could also be used to address the budgeting challenge, in that the fund could allow the government to set aside and “recycle” the savings from efficiency projects into new investments, rather than having the cost savings reduce future budgets.

While overcoming these barriers will be challenging, examples of innovation and leadership in the energy efficiency space abound in Mexico. For example, Sociedad Hipotecaria Federal’s EcoCasa program, as well as INFONAVIT’s green mortgage, are enabling the construction and retrofit of thousands of energy efficient homes in Mexico.  Further, the Inter-American Development Bank has recently announced a new green bond program to finance Mexican ESCOs.  Demonstrating its commitment to boosting investment in energy efficiency, the Mexican government is co-chairing the G20’s International Partnership for Energy Efficiency Cooperation. Financing efficiency is a global challenge, but Mexico City is continuing to move the dialogue forward.

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The UN Sustainable Energy for All (SE4ALL) Building Efficiency Accelerator is an international, multi-stakeholder network devoted to helping cities and sub-national governments speed up the adoption of best-practice building efficiency policies and double their rate of energy efficiency improvement.  The network also includes a number of corporate and NGO partners that cover a range of technical competencies across the building design, construction, operations and retrofit life cycle.   The World Resources Institute (WRI) Building Efficiency Initiative serves as the managing partner for the Building Efficiency Accelerator and leads a broad coalition of partners including ICLEI, the World Green Building Council, WBCSD and others in coordinating engagements in Latin America and around the world.

At the 2014 Climate Summit, Mexico City announced a commitment to the SE4ALL Building Efficiency Accelerator with goals to adopt a local energy code and undertake a retrofit of public buildings.  The WRI Building Efficiency Initiative and WRI’s Mexico affiliate CTS EMBARQ are leading the Mexico City engagement.  In March 2015, a multi-stakeholder workshop was convened where over 100 participants from local technical organizations, businesses and federal ministries met with the city, SE4All leaders and international delegates.  In April, the partners formed four working groups co-chaired by Mexico City and a local partner.  These groups meet every few weeks and conduct technical workshops to complete the recommendations which will be presented to the Mexico City government in September 2015.

In June, the Global Green Growth Forum held their Latin American and Caribbean meeting in Santiago, Chile where building efficiency policy challenges and market solutions were discussed during a session on the SE4ALL Building Efficiency Accelerator.  Christina Gamboa, Executive Director and CEO of the Colombia Green Building Council described the implementation challenges facing the region and the opportunity to promote building efficiency solutions that are attractive to both business and governments.  Manuel Olivera, C40 regional director, then described the work they are doing with 11 cities in Latin America to improve public buildings, private buildings and transportation systems.

The session included participants from the public-sector, private-sector and civil society who collaborated to prioritize a number of building efficiency policies based on importance and difficulty of implementation.  Building efficiency financing was considered very important, but relatively difficult to implement, while building energy codes and building certifications were nearly as important but easier to implement.  A major recommendation coming out of the session was to focus on intermediate sized cities in Latin America with populations from 500,000 to 2 million.  These cities often have committed leadership, less bureaucracy, limited capacity and receive less support from international organizations.

On September 9-10, the Colombia Green Building Council will host CONSTRUVERDE in Bogota where a similar session will be held to explore opportunities for the SE4ALL Building Efficiency Accelerator to engage with additional cities in Colombia and Latin America.  For additional information on the SE4ALL Building Efficiency Accelerator, please join us in Bogota at CONSTRUVERDE, register for an upcoming WRI/ICLEI webinar on September 1, or view a previously recorded webinar.

This article was originally published on usgbc.org.

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