In order to overcomeclimate change and support actionsin favor of a low carbon and climate resilient world, 195 countries signed theParis Agreement in December 2015 with the objective to keep the rise intemperature below two degrees. According to the IEA’s Outlook 2015, worldenergy demand will increaseby one third from 2013 to 2040,driven by economic development and growth in population. The demand for moreenergy and the need to reduce greenhousegas emissions as well as the continuous depletion of traditional energysources such as coal, oil and gas has initiated a movement to use renewableenergy and become energy efficient.
To combatclimate change and strengthen the climate resilience of a nation, banks, equity fundsand development institutions play an important role by acting as providers offinance (POF). As economic actors, they finance investments and thus facilitate the integration of sustainable energy into many ongoing business ventures. This paperintroduces the importance and the potential of energyefficiency and answers the question as to who the main stakeholdersare and what role they play. This paper defines energyefficiency projectsand the economics behind a successful investment. The POF are introduced to therole they play in energyefficiency finance, where energyefficiency differs from the world of today, what internal processesmay have to be amended and what sources of finance are available to energyefficiency investors. Keywords:renewable energy, energy efficiency, finance investments, sustainable. 1.
Introduction Renewableenergy and energyefficiency are the two main sources of sustainable energydevelopment. The formeris already popularbecause of its visibility, e.g. in the form of solar panels and wind turbines. Energyefficiency, which concentrates on saving energy as opposed to energy generation,is equally important. Both, renewable energy and energyefficiency should be part of any national sustainable energy plan.
Whereasrenewable energy provides a substitute for fossil energy sources and meets newenergy demand, energy efficiency curbs energy consumption while at the same time reducing greenhousegas emissions.Saving energy is the most cost efficient approach, as no new generationfacilities, transmission lines or distribution channels have to be paid for. The use ofenergy efficient technologies in industry and trade could reduce energy demandin OECD countries by approximately 15% and in developing countries includeIndonesia by about 25% over the next ten years. It has been statedthat, in the past 25 years, USD 5.
7 trillionin energy expenses have beensaved. As a rule of thumb, energy can be saved by a factor of four across allsocial strata, dependingon technical progress.For example, this means that a companycan double its output andreduce energy costs by one half. Energy efficiency is internationallyrecognized as a cost efficient way to reduce energy demand.