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Increasing energy efficiency appears to be one of the biggest challenges of our times. Decades of irresponsible exploitation of fossil fuels caused an existential threat to the planet. Scientifical evidence is unambiguous– to save the ecosystems and prevent a climatic catastrophe a radical reduction of anthropogenic emission of greenhouse gases is needed. Investment in renewable energy sources and taking measures to increase energy efficiency are therefore crucial.
Armenia has no domestic resources of fossil fuel and imports all of its oil and gas. Due to the absence of domestic fossil fuel resources and the increasing energy demand from the public buildings and housing sectors, Armenia’s dependence on imported primary energy sources strongly affects the country’s economy. Increasing energy prices have further aggravated this dependency.
In Armenia’s urban economy, buildings are one of the major sources of greenhouse gas emissions. The residential sector’s share in final energy consumption amounts to 36%. At the same time, the building sector represents significant potential to save energy. Realizing this potential is possible through the effective use of modern technologies, reinforcement of certification systems, and financing energy efficiency construction through international and local financial institutions.
AFC’s Housing Finance Project, financed by the KfW and implemented by the National Mortgage Company, intends to address these challenges. The project allows for financing of various loan purposes, for example purchase of housing from primary and secondary markets, renovation, and single-family house construction. The financing is offered by partner financial institutions— leading commercial banks and non-banking financial institutions of Armenia.
One of the main challenges of the project was to develop a mechanism for measuring the climate impact of financed sub-projects. The AFC team saw the need for a specific tool, allowing for the assessment of sub-projects and to be able to measure the i) annual energy saving amounts, ii) CO2 emission reductions, and iii) approximate monetary savings of the borrower. These three parameters are defined as “Climate Impact” elements.
For developing the tool, the project team considered current level of energy consumption in residential buildings and the Armenian legal and regulatory framework. The formulas calculating the climate impact of a sub-project compare the energy efficient (EE) level achieved through the financing with the current level of EE or with the minimal EE level required by legislation. This approach also considers the specific energy mix of Armenia and the climatic conditions in the different geographic zones.
Our newly developed sophisticated tool is very user friendly and can be easily applied by the partner financial institutions’ staff, even without engineering or environmental background. Nevertheless, we trained them to use the tool correctly and their reception was very positive.
The possible use of the tool goes far beyond the purposes of the project. It is envisaged that the tool helps real estate developers to measure the EE of their construction projects and to increase the climate impact without excessive cost. Furthermore, banks and other institutions can adjust their pricing policy and create additional incentives for the developers to increase the energy efficiency level of the construction projects. It is planned that one day the adjusted version of the tool will be available to the general public and used e.g. by clients buying real estate.
With the implementation of the Housing Finance Programme in Armenia, we are on the right track of reducing global CO2 emissions.
For more information please contact elena.yunatska [at] afci.de