Scaling-Up Investment in Low-Carbon Public Buildings

Due to a long period of neglect and under-investment, public infrastructure in Bosnia and Herzegovina (BiH) is now in a dire state and in urgent need of upgrade and modernization. In its Nationally Determined Contribution (NDC) under the Paris Agreement, BiH explicitly recognizes the potential of public sector buildings for greenhouse gas (GHG) emission reduction. Public buildings have been identified as the sector with the largest potential for cost-effective energy saving in BiH (20-60%).

Detailed energy audits conducted in public facilities by UNDP confirm that average energy use in a building can be reduced cost-efficiently by about 60%, assuming a given comfort level in the building (e.g. 20°C) before and after retrofitting.

In addition to energy efficiency, significant potential for GHG emissions reduction lies in fuel switch measures: over 80% of public sector buildings are currently using fossil fuels (coal, light fuel oil (LFO), natural gas) or district heating systems, which are also predominantly coal-based.

Deployment of BiH’s vast renewable energy resources – bioenergy (biomass/biogas), solar and other sources – combined with investments in energy efficiency, therefore have the potential to play an instrumental role in reducing GHG emissions and energy use in public buildings, currently amounting to approximately 10% of BiH’s annual governmental budget.

The current financing paradigm for investment in low-carbon retrofits of public buildings in BiH can be summarized as follows:

  • The existence of seemingly numerous, but cumulatively insignificant, grant-based funding sources/projects from national and international organizations complemented by end-users’ own finance;
  • The lack of a coordinated and integrated approach to public building retrofits that leads to ineffective and sub-optimal allocation of public funds;
  •  The lack of private sector involvement and interest in market-based finance, including lack of a developed market for the ESCO business model and energy performance contracts.

What we do?

The Low-Carbon Project will receive a total of US$ 17.346 million of GCF grant resources to overcome identified barriers to investment in low-carbon retrofits of public buildings and to leverage an additional US$ 105.22 million of co-finance from a range of sources, such as the Environmental Funds, entity and municipal budgets, and international organizations (UNDP, GEF, the World Bank, Sida), by addressing country and sector-specific investment risks.

The objective is to scale-up investment in low-carbon public buildings via design and implementation of the National Framework for Low-Carbon Investment in Public Buildings, comprising an integrated package of policy, regulatory, technological, informational, financial and managerial solutions designed to address country-specific risks and barriers to investment.

The Project will result in a four-to five-fold increase in the level of investment in low-carbon public buildings. This will enable BiH to meet its stated objective to reduce GHG emissions from the public buildings sector.

The project will result in:

  • A direct reduction in greenhouse gas (GHG) emissions of 2,02 million tCO2e over the lifetime of the investments enabled, at a cost to the GCF of US$ 9/tCO2e.
  • Significant indirect emissions can be expected –7.1 - 8.1 million tons of CO2 reduction due to the project enabled market transformation – yielding a total estimated cost per tone of CO2 reduced to US$1.8.
  • 150,000 people will directly benefit – occupants and users of public buildings (4% of the total population), including 80,000 women.
  •  creation of over 5,630 new full-time equivalent jobs.

Expected Outcomes

Building on UNDP’s Derisking Renewable Energy Investment (DREI) approach, the proposed project consists of two closely related outputs aimed at addressing financial and non-financial barriers respectively, thereby reducing the risks and achieving an attractive and acceptable risk-return profile.

Outcome 1 - Address non-financial barriers to investment in low-carbon buildings and infrastructure (“Policy de-risking”). The Project will provide technical assistance to public and private sector stakeholders at municipal, cantonal, entity and national level in BiH to help address non-financial/structural barriers to investment.

Outcome 2 - Addressing financial barriers to low-carbon investment in buildings and infrastructure (“Financial de-risking and Investment support”). The Project will support implementation of the National Framework for Low-Carbon Investment in public buildings to address identified financial barriers and to establish a blueprint for a more effective, better coordinated and harmonized approach to allocation of public funding to stimulate investment in low-carbon buildings.

Under the Framework, all public buildings (regardless of jurisdiction) will be able to receive technical assistance for energy efficiency and renewable energy project preparation. Those projects that meet minimum technical, financial, socio-economic and environmental requirements will be eligible to receive GCF funding to co-finance investment and the GCF grant will be used at the minimum level to make those projects viable. The financial requirements, i.e. simple pay-back of 8 years and above, has been defined in such a way as to ensure that GCF resources are not blended with international finance institutions (IFI) financing for a specific building retrofit project, but rather complement and fill in the remaining financing gap which can’t be addressed through IFI’s concessional funding, but is required to make such investment viable. 

Sustainable Development Goals targeted by LowCarbon Project

Status:

Ongoing

Start date:

2018

Estimated end date:

2026

Focus Area:

Energy and Environment

Donor:

Green Climate Fund

Partners:

Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina, Federal Ministry of Physical Planning, Ministry of Spatial Planning, Civil Engineering, and Ecology of Republika Srpska, Environmental Fund of the Federation of Bosnia and Herzegovina, Environmental Protection and Energy Efficiency Fund of Republika Srpska

Status:

Ongoing

Project start date:

September 2018

Estimated end date:

August 2026

Focus area:

  • accelerate structural transformations
  • Project office:

    UNDP in Bosnia and Herzegovina

    Implementing partner:

    United Nations Development Programme

    Full project information  

    Funding Support by

    Donor name

  • United Nations Development Pro
  • Government Of Bosnia And Herzegovina
  • Green Climate Fund
  • Amount contributed

    $4,800,706

    Delivery in previous fiscal year

    2020 $1,291,676

    2019 $2,048,938

    2018 $23,907

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