Energy efficient Mortgages Action Plan (EeMAP) & Energy efficient Data Protocol and Portal (EeDaPP)

Transcription

1 Energy efficient Mortgages Action Plan (EeMAP) & Energy efficient Data Protocol and Portal (EeDaPP)

2 The Initiative The Energy Efficient Mortgages Initiative is aimed at delivering a standardised European framework and data collection process for energy efficient mortgages, with favourable financing conditions for energy efficient buildings and energy saving renovations. It consists of two parallel projects, the Energy efficient Mortgages Action Plan (EeMAP) and the Energy Efficient Data Portal & Protocol (EeDaPP), and is funded via the European Commission s Horizon 2020 Programme. Energy Efficient Mortgages Initiative 2

3 Banks can Play a Game Changing Role in Improving Energy Efficiency (EE) In the EU 28 there are 510 million people of which More than 350 million live under their own roof 7498 MFIs and 188,109 branches Private financing On average each branch serves around 2,700 people This initiative has huge potential! 247 million dwellings more than 220 million dwellings were built before 2001 Energy Efficient Mortgages Initiative 3

4 Underlying risk parameters impacted by EE Retrofitting impacts positively on property value ensuring wealth conservation & loss mitigation by preventing brown discount EE leads to a reduction in the impact of energy costs to income, reducing borrowers probability of default Energy Efficient Mortgages Initiative 4

5 Objective & Underlying Business Case The ultimate objective is a pan-european private bank financing mechanism, based on a standardised approach, to encourage energy efficient improvement by households of the EU s housing stock by way of financial incentives linked to the mortgage, and in this way support the EU in meeting its energy savings targets. Independent from, but complementary to, public funds or tax incentives. Underlying businesscase: Energy Efficient Mortgages Initiative 5

6 Bridging Renovation Gap - In Practice Before EE Renovation EE Renovation After EE Renovation Mortgage applicatio n Energy efficiency advisor (EEA) to advise on: 1. Necessary EE renovation 2. Complementar y funding sources (subsidies) Mortgage granted & EE topup provided directly to SME SME carries out EE renovation, guaranteeing performance Bank grants preferential interest rate on mortgage based on EE/smart meter TT 0 Qualified SME TT Ex ante EEA certifies EE Ex post 1 selected by bank valuation of Valuation of renovations in to carry out EE property property renovation line with EE requirements 6

7 Incentive Chain Borrower: - Lower energy bills - Energy Efficiency Behaviour - Lower interest rate on mortgage for energy efficient property - Free capital for retrofitting SME/ Real Economy: - SMEs active in the retrofitting of buildings and dwellings to become more energy efficient - Juncker Plan Issuer/Originator: - Access to funding cost advantages -Increased loss mitigation capacity - Lower capital requirements as a result of lower PD - Reputational benefits Society: - Reduction in energy consumption - Wealth conservation - Reduction in greenhouse gas emissions Investor: - Diversification of investor portfolio - Allocation of energy efficient investment buckets - Green added value vs brown discount Government: - Pan European plan to stimulate energy efficient investment in residential property - Improvement of existing housing stock - Compliance with 1997 Kyoto Protocol COP21 - Access to quantitative & qualitative database on energy efficient mortgages & covered bonds Energy Efficient Mortgages Initiative 7

8 Market Best Practices: White Paper Overview of current practices in relation to finance, energy efficiency indicators, property valuation and the impact of energy efficiencyon risk management Key recommendations towards the creation of an Energy Efficient Mortgage product for Europe 1. A simple & standardised framework for Energy Efficient Mortgage to help market entry allowing for national heterogeneity, with guidance on the underlying finance mechanism 2. A clear definition of an Energy Efficient Mortgage to enable banks to differentiate between energy efficient and conventional mortgages in their risk management processes 3. Energy efficiency in property valuations. To ensure that energy efficiency is appropriately taken account of in property valuations, banks should be guided on how and what to instruct property valuers in relation to energy performance of buildings 4. Simple and proportionate energy efficiency performance indicators, with flexibility to take account of differences between current national approaches The White Paper is available on the energy Efficient Mortgages website: 8

9 Market Best Practices: Five Technical Reports The research findings are detailed in five Technical Reports Building Performance Indicators EE Impact on probability of default Green Finance Mortgage lending valuation Consumer Research Insights 9

10 GDP and Energy Consumption 16,000 Energy consumption evolution in the EU (current composition) 1,250,000 in EUR bn 14,000 12,000 10,000 8,000 1,200,000 1,150,000 1,100,000 6,000 4,000 2,000 1,050,000 1,000, ,000 GDP Energy consumption (RHS) Source: Eurostat Energy Efficient Mortgages Initiative 10

11 Home, Expensive Home Housing cost as % of disposable income below 60% median income above 60% median income Source: Eurostat 2017 EU-SILC survey Around 42% of disposable income of poorer households (below 60% of median income) is spent on housing costs Energy Efficient Mortgages Initiative 11

12 Heat or Eat Dilemma 21% of EU population that earn 60% or less than median income in their respective countries, over 18 million people, live in a household which they cannot adequately heat This issue has different degrees of relevant according to country Source: Eurostat EU-SILC survey 2017 *according to the Survey definition Energy Efficient Mortgages Initiative 12

13 Owners or Tenants 100% 90% 80% 70% 60% 50% Breakdown of tenure status by income group In EU breakdown of how citizens live is reflected by their income group Poorer part of population in Europe (around 86 million people earn less than 60% of their respective Member States median income) typically live as tenants These individuals are also more than two times less likely to have a mortgage than the rest of the population 40% 30% % 10% 0% 12 below 60% median income 29.6 above 60% median income owner with mortgage owner without mortgage tenant market price tenant reduced price Source: Eurostat 2016 figures Energy Efficient Mortgages Initiative 13

14 Houses with History EU housing stock age structure 20% 29% 23% 28% before after 1990 Breakdown of age of housing stock according to selected capital cities 80% 70% 60% 50% 40% 30% 20% 10% 0% before after 1990 Energy Efficient Mortgages Initiative 14

15 Pilot Scheme: To begin Solving the Chicken & Egg Dilemma Assets EE mortgages collateral Liabilities EE bonds Covered Bonds Securitisation European Investmen t Fund (EIF) Investor Demand National Promoting Banks: Green Purchase Programs European Investmen t Bank (EIB) Energy Efficient Mortgages Initiative 15

16 Energy Efficient Mortgages Pilot Scheme Under the Energy Efficient Mortgages Pilot scheme, Pilot Scheme Banks have the opportunity to analyse the feasibility and voluntarily implement the Energy Efficient Mortgage Product Framework into existing product lines and processes. On 14 June at the Energy Efficient Mortgages event in Windsor, Pilot Scheme Banks were invited into take part in 7 subgroups to identify the opportunities and risks in various areas (i.e. Origination/retail; risk management; marketing; funding & investor relations; partnerships; IT solutions & Data; development of technical expertise), taking as the starting point the Energy Efficient Mortgage Product Framework, and highlighting potential operational solutions. For further information: Press release, 14 June : "The light turns green: Energy Efficient Mortgages Pilot Scheme goes live! Energy Efficient Mortgages Pilot Scheme Roadmap for Lending Institutions Energy Efficient Mortgages Pilot Scheme Pioneers Energy Efficient Mortgages Initiative 16

17 Pilot Scheme: Existing Data Analysis & Operational Test Phase Phase 1: Framework Preparation & Analysis of Existing Data: Design of Product Framework and System Set-up Substantiation of Business Case Focus on Correlation between EE and LGD & PD Phase 2: Operational Test Phase: Deployment of Product Framework and High-level Guidelines Assessment of framework Implementation Tag excising Mortgage Loans and begin Originating EE Mortgage Product Involvement of the Advisory Council Data collection v June 2017 June June 2020 Launch Event, Windsor Energy Efficient Mortgages Initiative 17

18 List of Pilot Scheme Banks Involved (i): ABN AMRO (NL) Argenta Bank (BE) AXA Bank (BE) Banca Monte dei Paschi di Siena, BMPS (IT) Banco BPM (IT) Belfius Bank & Verzekeringen (BE) Berlin Hyp AG (DE) BNP Paribas Fortis (BE) BNP Paribas (UK) Groupe BPCE (FR) BPER Banca (IT) Caisse des Dépôts Group (FR) Energy Efficient Mortgages Initiative 18

19 List of Pilot Scheme Banks Involved (ii): Caixa Geral de Depósitos, CGD (PT) Caja Rural de Navarra (ES) Compagnie de Financement Foncier (FR) Crédit Agricole (IT) Crelan (BE) Friulovest Banca (IT) Garanti Bank (RO) ING Belgium (BE) KBC Bank (BE) Mortgage Society of Finland, Hypo (FI) Münchener Hypothekenbank eg (DE) Norddeutsche Landesbank, NORD/LB (DE) Energy Efficient Mortgages Initiative 19

20 List of Pilot Scheme Banks Involved (iii): Nordea Bank (SE) Nordea Eiendomskreditt (NO) Nordea Kredit (DK) Nordea Mortgage Bank (FI) OP Mortgage Bank (FI) Rabobank (NL) Raiffeisen Bank (RO) Société Générale (FR) Société Générale (IT) Triodos Bank (BE) Triodos Bank (ES) Unión de Créditos Inmobiliarios, UCI (ES) Volksbank Alto Adige (IT) Energy Efficient Mortgages Initiative 20

21 Members of the Advisory Council: European Commission European Investment Bank (EIB) European Bank for Reconstruction and Development (EBRD) The World Bank UNEP Finance Initiative International Finance Corporation (IFC) The main role of the Advisory Council is to help advise and support the deployment of the Pilot Scheme in the market and explore the possibility of a regulatory sandbox for banks participating in the Pilot Scheme Energy Efficient Mortgages Initiative 21

22 List of Supporting Organisations Involved (i): Alliance HQE GBC France (FR) AmTrust International Cohispania (ES) Croatia Green Building Council, CGBC (HR) CEN CENELEC Dutch Green Building Council (NL) European Builders Confederation, EBC Finance Denmark, FIDA (DK) Flemish Construction Confederation, VCB (BE) German Sustainable Building Council, DGNB (DE) Green Building Council España, GBCe (ES) Green Building Council Finland, FIGBC (FI) Energy Efficient Mortgages Initiative 22

23 List of Supporting Organisations Involved (ii): Green Building Council Italia, GBC (IT) Irish Green Building Council, IGBC (IE) Madrid City Council (ES) Polish Green Building Council, PLGBC (PL) Romania Green Building Council, RoGBC (RO) Romanian Association of Banks, ARB (RO) S&P Global Ratings Tinsa Group (ES) UK Green Building Council, UKGBC (UK) UK Regulated Covered Bond Council, UK RCBC (UK) Union Professionnelle du Crédit/Febelfin (BE) Verband deutscher Pfandbriefbanken, vdp (DE) Energy Efficient Mortgages Initiative 23

24 60 confirmed participants (37 banks and 23 other organisations) Energy Efficient Mortgages Initiative 24

25 Pilot Scheme: Banks Coverage This map displays latest state of commitments made by 37 banks across the EU to Pilot Scheme. In total these banks represented EUR 3,106 billion (44,5%) in total outstanding mortgage loans. Energy Efficient Mortgages Initiative 25

26 Coverage of pilot banks to total mortgage outstanding in 2017 * Energy Efficient Mortgages Initiative 26

27 Pilot Scheme: Product Framework & Guidelines The Energy Efficiency Mortgage Pilot Scheme Product Framework, which should be considered in order to ensure successful implementation of an Energy Efficient Mortgage product within banks existing internal procedures, consist of the following sets of high-level guidelines: I. Implementation Guidelines for Banks II. Building Performance Assessment Guidelines III. Valuation Guidelines: Energy Efficiency Checklist The final Product Framework has incorporated feedback received from the market consultation, series of national roundtables and interviews conducted since the publication of the draft Product Framework in February. The Pilot Scheme will test the Product Framework in an operational environment and feedback received from participants will feedback back into the guidelines with a view to reviewing and adjusting the Framework over time as appropriate to respond to the market. Energy Efficient Mortgages Initiative 27

28 From a Valuation Perspective: SSmmmmmmmm mmmmmmmmmm EEEEEE 0 EEEEEE 1 + list of EE improvements VVVVVVVVVV 0 VVVVVVVVVV 1 Energy Efficient Mortgages Initiative 28

29 Pilot Scheme: Looking for Market Solutions Identification of Critical Areas Pilot Scheme: Market Think-Thank Facilitation of simplified EEM asset value chain (i.e. previous slides) How to incorporate and maximise the EPC standard Certification/guarantee of EE improvements (i.e. previous slides) How best to link and capture dynamic datasets Commercial partnership between banks and utility providers Areas to be examined: o Origination/Retail o Risk Management o Marketing o Funding & Investor relations o Partnerships (development of synergies with other stakeholders) o IT Solutions & Data o Development of technical expertise (SMEs, Valuers, Energy Efficiency experts) All areas to be further studied by Subgroups of Pilot Scheme participants in advance of the Pilot Scheme Meeting 26 & 27, Venice Energy Efficient Mortgages Initiative 29

30 The Energy Efficient Mortgage Process Energy Efficient Mortgages Initiative 30

31 Covered Bond Label: Sustainable Covered Bonds The Labelled Sustainable Covered Bond Definition: Energy Efficient Mortgages Initiative 31

32 Pilot Scheme: Next Meeting Energy Efficient Mortgages Pilot Scheme Meeting Venice, (evening): Welcome Dinner 27 (9h00-15h00): Energy Efficient Mortgages Pilot Scheme Meeting, Don Orione, Zattere Dorsoduro 909/A Venezia 27 (16h00-17h00): Closed meeting between Pilot Banks Group Leaders and the Advisory Council, Don Orione, Zattere Dorsoduro 909/A Venezia 27 (evening): Networking Dinner Energy Efficient Mortgages Initiative 32

33 Partners For additional information on the Energy Efficient Mortgages Initiative Visit: Contact: Luca Bertalot Secretary General of the EMF-ECBC The EeMAP and EeDaPP projects have received funding from the European Union s Horizon 2020 research and innovation programme under grant agreements No and