Introduction

South-Eastern European, Eastern European and Central Asian countries are confronted with a wide range of economic and environmental problems caused by their inefficient and polluting energy systems. At the same time, their energy economies provide some of the most promising opportunities for reducing global greenhouse gas emissions. Achieving the potential will require cost-effective energy efficiency (EE) improvements and deployment of renewable energy (RE) technologies. The investment potential for energy efficiency is so large in these countries that only the private sector can provide the capital needed to achieve meaningful results. Mobilizing private capital requires a market for energy efficiency in which large investments can be made with low transaction costs at an acceptable ratio of risk to return within a reasonable period of time. At present, private investors do not often finance energy efficiency projects in these countries because dedicated sources of financing are lacking and local banks are generally unfamiliar with such investments. Another obstacle in financing energy efficiency projects is the absence of policy and institutional support for their implementation. The lack of knowledge and experience of how to select and formulate energy efficiency investment projects is often a challenge for local experts.

Related Subject(s): Natural Resources Water and Energy