Financial products to promote energy efficiency in buildings

Denmark | July 2008 - January 2009

This analysis describes experiences in Denmark and abroad with financing of energy efficiency in buildings.

Some private banks abroad have developed niche products for financing energy efficiency in buildings. Most products offer lower interest rates on loans to specific energy efficient equipment such as insulation, low energy windows, etc. Some foreign banks utilise energy labelling of buildings when financing renovations in households. These financial products often demonstrate a life cycle orientated approach to financing energy efficiency and focus on how financially viable investments in energy efficiency can reduce expenses associated with a building or house. This reduces the borrower’s exposure to fluctuations in energy prices and improves the borrowers overall financial position due to reduced overall expenses.

Only a few financial products in Denmark are earmarked for energy efficiency investments in buildings. Energy efficiency initiatives in buildings are generally financed through the typical products offered by banks and building societies. There is an increasing tendency to utilize energy efficiency as a marketing tool in advertising for these products.