Abstract
The IEA has estimated that over the next four decades US$31 trillion will be required to promote energy efficiency in buildings. However, the opportunities to make such investments are often constrained, particularly in contexts of austerity. We consider the potential of revolving funds as an innovative financing mechanism that could reduce investment requirements and enhance investment impacts by recovering and reinvesting some of the savings generated by early investments. Such funds have been created in various contexts, but there has never been a formal academic evaluation of their potential to contribute to low carbon transitions. To address this, we propose a generic revolving fund model and apply it using data on the costs and benefits of domestic sector retrofit in the UK. We find that a revolving fund could reduce the costs of domestic sector retrofit in the UK by 26%, or £9 billion, whilst also making such a scheme cost-neutral, albeit with significant up-front investments that would only pay for themselves over an extended period of time. We conclude that revolving funds could enable countries with limited resources to invest more heavily and more effectively in low carbon development, even in contexts of austerity.
Original language | English |
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Pages (from-to) | 739-748 |
Number of pages | 10 |
Journal | Energy policy |
Volume | 86 |
Early online date | 29 Aug 2015 |
DOIs | |
Publication status | Published - 1 Nov 2015 |
Keywords
- Carbon, Energy, Finance, Investment, Retrofit, Revolving fund
Profiles
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Corrado Topi
- Stockholm Environment Institute at York - Senior Research Associate, Former employee
Person: Research