In in energy efficiency finance, where energy efficiency

In order to overcome
climate change and support actions
in favor of a low carbon and climate resilient world, 195 countries signed the
Paris Agreement in December 2015 with the objective to keep the rise in
temperature below two degrees. According to the IEA’s Outlook 2015, world
energy demand will increase
by one third from 2013 to 2040,
driven by economic development and growth in population. The demand for more
energy and the need to reduce greenhouse
gas emissions as well as the continuous depletion of traditional energy
sources such as coal, oil and gas has initiated a movement to use renewable
energy and become energy efficient.

 

To combat
climate change and strengthen the climate resilience of a nation, banks, equity funds
and development institutions play an important role by acting as providers of
finance (POF). As economic actors, they finance investments and thus facilitate the integration of sustainable energy into many ongoing business ventures.

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This paper
introduces the importance and the potential of energy
efficiency and answers the question as to who the main stakeholders
are and what role they play. This paper defines energy
efficiency projects
and the economics behind a successful investment. The POF are introduced to the
role they play in energy
efficiency finance, where energy
efficiency differs from the world of today, what internal processes
may have to be amended and what sources of finance are available to energy
efficiency investors.

 

Keywords:
renewable energy, energy efficiency, finance investments, sustainable.

 

1.  Introduction

 

Renewable
energy and energy
efficiency are the two main sources of sustainable energy
development. The former
is already popular
because of its visibility, e.g. in the form of solar panels and wind turbines. Energy
efficiency, which concentrates on saving energy as opposed to energy generation,
is equally important. Both, renewable energy and energy
efficiency should be part of any national sustainable energy plan.

 

Whereas
renewable energy provides a substitute for fossil energy sources and meets new
energy demand, energy efficiency curbs energy consumption while at the same time reducing greenhouse
gas emissions.
Saving energy is the most cost efficient approach, as no new generation
facilities, transmission lines or distribution channels have to be paid for.

 

The use of
energy efficient technologies in industry and trade could reduce energy demand
in OECD countries by approximately 15% and in developing countries include
Indonesia by about 25% over the next ten years. It has been stated
that, in the past 25 years, USD 5.7 trillion
in energy expenses have been
saved. As a rule of thumb, energy can be saved by a factor of four across all
social strata, depending
on technical progress.
For example, this means that a company
can double its output and
reduce energy costs by one half. Energy efficiency is internationally
recognized as a cost efficient way to reduce energy demand.