Could green mortgages help deliver the energy efficiency revolution Europe needs?
Business Green, September 20, 2016
Backed by the World Green Building Council, the “groundbreaking” energy efficiency financing project could offer homebuyers across the EU better borrowing rates on mortgages in return for purchasing more energy efficient homes or committing to implementing energy saving work within properties.
Europe regional director of the World Green Building Council, James Drinkwater, said such innovative approaches to financing energy efficiency are needed if the world is to keep global warming within the Paris Agreement target of well below 2C.
“Mortgages which reward consumers and investors by recognising energy efficiency represent one such way, and will undoubtedly play a key role in helping to achieve our ambitious climate change targets,” he predicts.
The European Energy Efficiency Mortgage initiative brings together a consortium of major banks and mortgage lenders as well as businesses and organisations from the building and energy industries. It is led by the European Mortgage Federation – European Covered Bond Council (EMF-ECBC), which represents over 95 per cent of covered bond issuers in the EU.
“The real added-value of this initiative is that we are creating a standardised approach where it will be possible to assess the green value of a building in a harmonised and marketable way right across Europe,” EMF-ECBC secretary general Luca Bertalot tells BusinessGreen from the launch of the project in Madrid. “This will develop a common approach to the green value for banks, valuers and all the stakeholders in the value chain, which will of massive help to the SME sector working on the retrofitting as well.”
The initiative will explore the link between energy efficiency and borrowers’ reduced probability of default, as well as the increase in value of energy efficient properties. Bertalot believes that for banks and investors, identifying the most efficient properties could lead to mortgage loans that represent lower risk on the balance sheet and therefore qualify for a better capital treatment.