More than 20 participants representing public authorities across Europe joined a unique participatory lab “Access to finance for the local energy transition: how to move away from subsidies?” at the European Week of Regions and Cities 2023 hosted by PROSPECT+ in collaboration with the Covenant of Mayors Office, Smart Cities Marketplace, and Managenergy.
Georg Houben, representing the European Commission’s DG ENER, emphasized the challenges faced by cities and regions at the forefront of climate action and job creation due to the ambitious climate goals of FitFor55. He stressed the need for more than just EU, regional, and national funding to achieve climate neutrality by 2050, urging local authorities to tap into private finance.
Sylwia Slomiak from Eurocities provided an overview of Prospect+’s initial consultation findings, revealing that public authorities still require additional capacity, advisory support, and improved national regulations to adopt alternative financing models at the local level in Europe.
Tommaso Buso, representing Bankers without Boundaries, offered practical insights on sustainable investments from an investor’s perspective, with a focus on effective project implementation. Both Georg and Tommaso highlighted the value of initiatives like the European City Facility and the Smart Cities Marketplace, which connect financiers with public authorities and offer municipalities advisory support and grants to bridge capacity gaps and develop investment concepts.
The lab showcased three case studies from Spain, France, and Croatia. Angela Rivada covered investments in transport and building renovations, emphasizing Energy Performance Contracting. Laurent Chanussot pointed out the advantages of dedicated one-stop shops for local authorities in energy-efficient public building projects. Sanela Mikulčić Šantić shared insights on renewable energy cooperatives, crowdfunding, and how her region overcame regulatory barriers with a micro-loans scheme.
Roundtable discussions fostered in-depth idea exchange, focusing on persistent challenges for local authorities. These discussions aligned with Prospect+ Policy Dialogue findings. Angela, Laurent, and Sanela highlighted common issues and creative solutions. While barriers are acknowledged, there’s a need for tangible metrics to illustrate them to a broader audience.
There’s a need for a collaborative effort involving both local and national bodies to standardize regulations across Europe. Participants noted a significant gap between administrative aspirations and practical implementation, especially in smaller municipalities. Nevertheless, they believed that with adequate support, challenges related to scale and expertise could be overcome. Moreover, smaller municipalities often require additional infrastructure and knowledge to effectively access available financial resources.
While various financing options are available, participants highlighted that not all are equally understood or accessible across member states. They stressed the importance of financial return on investment and market maturity, especially for energy projects, in increasing private finance for municipal investments. The group also agreed that transitioning away from subsidies can be financially advantageous and offer societal benefits. For instance, crowdfunding and microloans can be attractive alternatives for citizens, especially when banks provide lower interest rates than municipalities can offer for community projects.
In summary, Tommaso Buso emphasized the importance of trust and credibility in energy projects, stressing transparent communication between municipalities and investors. He recommended that municipalities better demonstrate the viability and potential returns of their projects to attract investments. Furthermore, he highlighted the role of non-financial barriers, such as socio-cultural factors, public trust, and stakeholder engagement, in project success.
The key takeaway from the session was clear: innovative financing is vital for accelerating a sustainable energy transition, with increasing momentum in European regions and cities adopting these models. Nonetheless, local authorities need more support, and regulatory conditions must be standardized across EU member states to ensure equal opportunities for regions in addressing climate and energy challenges effectively.