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Energy efficiency Data Protocol and Portal

Periodic Reporting for period 1 - EeDaPP (Energy efficiency Data Protocol and Portal)

Reporting period: 2018-03-01 to 2019-02-28

A 40% cut in greenhouse gas emissions and around €180 billion of additional investments a year are needed to meet the EU's 2030 targets under the Paris Agreement and to achieve climate neutrality by 2050, through a fair transition encompassing all sectors of the economy. The financial sector has the potential to play a game-changing role by supporting sustainable growth and mobilizing private capital for green investments.
In this context, the EeDaPP aims to support the energy efficient mortgage financing mechanism designed under the EeMAP, by delivering a market-led protocol (Fig1) which facilitates the large-scale gathering and processing of data relating to energy efficient mortgage assets, via a standardised reporting template. In the long term, the data will be accessed by way of a common, centralised portal (Fig2), allowing for continuous tracking of the performance of the energy efficient mortgage assets, thereby also facilitating the tagging of such assets for the purposes of energy efficient bond issuance.
Under the EEMI, the EeDaPP project complements the EeMAP project, launched in 2017, with the aim of creating a standardised mortgage product according to which building owners are incentivised to improve the energy efficiency of their buildings by way of preferential financing conditions linked to the mortgage. Furthermore, EeDaPP builds on the relevance of the potential energy efficiency improvements of EU’s building and the need to correctly and effectively report and store information on the performance of energy efficient residential and commercial mortgages. Access to capital markets for energy efficiency investments will be stimulated by integrating the 'green value' of buildings in property valuation through collection of market data across the EU and by proposing a practical design for the gathering, processing and disclosing of this data. This will provide transparency, viability and risk assessment, reducing uncertainty about the financial performance of energy efficient assets and their viability, which, in turn, will mobilise private capital into energy efficient investments, strongly supporting the EU’s energy savings targets.
From March to September 2018, the EeDaPP Consortium investigated the best practices in place within existing data systems in data gathering, extraction and handling from a technical perspective. The research findings are detailed in a confidential report in which partners analysed the best practices on: 1. Data Storage; 2. Technology Selection; 3. Data Interaction Strategies; 4. Structural Flexibility.
Alongside the best practice analysis undertaken, a comprehensive mapping of existing ‘green’ reporting criteria was conducted. Furthermore, market needs and possible gaps in relation to an energy efficient mortgage data reporting protocol and data portal implementation were identified with the involvement of the EEMs Pilot Scheme Lending Institutions and Supporting Organisations. In February 2019 the White paper on a common minimum pan-European green reporting criteria was published, presenting a proposal for a standardised data protocol for the gathering, processing and disclosing of data related to energy efficient mortgages. A template containing relevant data (financial, risk, property, borrower, energy efficiency) has be defined, together with legal considerations for the reporting of the information. In parallel, feedback was provided on the usability of the taxonomy developed by the European Commission’s Technical Expert Group on Sustainable Finance.
The Consortium moreover began a data and correlation analysis, aiming to substantiate the correlation between energy efficiency and property value, and therefore Loss Given Default. Some scoping analysis was conducted with the available data; partners also investigated a possible plan B in case bank loan level data is not be accessible.
Thanks to the joint communication and dissemination efforts, the Energy Efficient Mortgages Initiative (EeMAP & EeDaPP) has received attention in both national and international press and also from relevant authorities. The Consortium has moreover been invited to present the Energy Efficient Mortgages Initiative at several high-profile events on climate issues.
The Energy Efficient Mortgages Initiative, of which EeDaPP is a core pillar, reflects the strong commitment of the mortgage industry to support a clean energy transition and to foster sustainable growth to the benefit of all. At the time of writing, 49 lending institutions, which represented 55% of mortgages outstanding in the European Union equal to 25% of EU GDP at the end of 2018, have signed up to the EEMI Pilot Scheme, pointing to the transformative potential of the Initiative.
The Pilot Scheme lending organisations are supported by 33 supporting organisations and by an Advisory Council, which promotes and facilitates dialogue between stakeholders from the financing and banking communities, property and construction sectors, as well as policymakers with the aim to address specific market failures and the criticalities identified during the implementation phase.As indicated above, through EeDaPP the Pilot Scheme involves the collection and analysis of loan data over time with a view to, among other objectives, substantiating the correlation between the improved energy efficiency of a building and subsequent lower credit risk. Existing literature points to a correlation between the two, however the innovation brought by EeDaPP is to conduct this analysis on banks’ current loan books and to enable banks to track performance over time.The Initiative has the long-term potential to accelerate investments in energy efficiency in residential and commercial buildings across Europe. In the original grant agreement, the Consortium provided a theoretical, illustrative example of the cumulative investments which might be made by European stakeholders in as a result of energy efficient mortgages. Based on annual gross lending of a large number of EU Member States of €851 billion between 2012 and 2017, it was estimated that €23 billion of investment in energy efficiency could be achieved as a result of both EeMAP and EeDaPP together.This figure was intended as a projection only for a period of 5 years after the conclusion of the Project. For the purposes of demonstrating potential energy savings as a result of the EEMI, the EeMAP Consortium also calculated that based on an assumption that up to 35,000 houses can benefit from an energy efficient mortgage, and assuming a conservative energy savings rate of 15%, issuing 35,000 EEMs a year could achieve savings of 88 GWh per annum. After the launch of EeDaPP, the working assumption was that, as with the potential investments in energy efficiency, half of these savings would be delivered through EeMAP and half through EeDaPP.
Figure 1: Preliminary draft standardised data protocol
Figure 4: Coverage of pilot banks to total mortgage outstanding in 2017
Figure 3: 72 confirmed participants (42 banks and 30 other organisations)
Figure 2: Centralised Data Portal Concept to be Designed during Project