Financing Goes ‘Green’

Energy prices and consumption seem to be on an upward trajectory. In fact, energy costs have steadily risen over the last decade and are expected to carry on doing so as consumption grows worldwide.

Businesses Eager to Introduce Energy Efficiency

Especially for businesses, the cost of energy is an increasingly significant issue. In a survey conducted by the Organization for Economic Co-operation and Development (OECD) on business energy consumption in its member countries (e.g. France, Spain, India, USA, Russia, Poland, UK, Germany) in 2010, 96 percent of participating (large) businesses indicated that they had started implementing energy-saving measures. Moreover, when asked about their motivations to reduce energy consumption, respondents cited “reduce energy costs” as their most important driver.

However, one must be aware that the turn towards energy-efficiency is a challenging issue. It involves vast investment sums and thorny issues around planning and community relations. Thus the current reduced access to capital puts an important barrier in the way of investing in energy-efficient equipment: Bank credit is tight in mature economies. It is expected to remain so in the near-term in an atmosphere of slow economic growth and concerns about stability in the Eurozone. Furthermore, governments in key emerging markets such as China are restricting credit availability, in order to guard against inflation.

Innovative Financing Methods in Need

Businesses are therefore seeking alternatives to standard bank credit in order to finance energy-efficient investments. Innovative financing methods are thus coming to market which offset the energy-efficient investment costs against energy savings across the financing term. Within this, they effectively provide a zero-net-cost investment technique.

via Financing Goes ‘Green’ · Environmental Management & Energy News · Environmental Leader.

Categories: Energy, Finance