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By Arah Schuur, Director of the Energy Efficiency Building Retrofit Program, Clinton Climate Initiative
(This article appears in the April, 2011 issue of The ACUPCC Implementer)

“How do we pay for this?” More and more, that is one of the first questions that public and private sector building partners ask before undertaking energy efficiency improvements to their buildings. Through the Clinton Climate Initiative (CCI) Energy Efficiency Building Retrofit Program, we provide pro bono advisory support to building owners around the world to help address this very issue, helping to plan, develop and implement large-scale energy efficiency projects. For almost every building owner, regardless of real estate sector and geography, finding or justifying the up-front capital for large energy efficiency projects is increasingly challenging as internal finances get tighter and the quick-payback projects are exhausted.

To address capital availability barriers, CCI works with financial institutions and other providers of capital to adapt existing and create new financial products that are specifically tailored to building energy efficiency projects. CCI typically assists in convening stakeholders; assessing market demand from building owners and financial institutions; identifying legal and accounting related issues; and developing and executing work plans. At a project level, we help building owners with financial modeling and to assess financing options in the local market; solicit interest from capital providers; review proposals and term sheets; and assist, where appropriate, in the negotiation process.

In our work with ACUPCC signatories, CCI has helped schools on a one-on-one basis to model cash flows and investment returns from various types of energy efficiency projects and figure out how to bundle (or unbundle) projects in a way that reflects the school’s financial plan. We connect schools with traditional and new sources of capital for their retrofit projects. Through our experience in developing projects, we have gathered a trove of information about the sources of capital available for energy efficiency projects, the typical barriers that schools face in identifying and accessing this money and how to overcome those barriers.

In a new project with Second Nature and the ACUPCC, CCI will be helping to disseminate information on financing building retrofits to the ACUPCC community online and in events throughout the year. CCI is working with volunteers from signatory institutions to prioritize and build the suite of financial tools that will be launched in the spring. Some of the topics the group has identified as high priorities include:

• Identifying and describing some of the newer, non-traditional methods for financing energy efficiency including energy service agreements, managed utility service contracts, and internal revolving loan funds. In addition, we will demystify some of the more traditional methods, such as tax-exempt lease-purchase agreements and energy performance contracts.
• Highlighting case studies of schools that have successfully utilized innovative financial methods.
• Providing specific tools for quantifying and communicating the investment profile and cost/benefit analysis of various projects.
• Consolidating existing resources in one place, creating a single starting point for signatories interested in researching financing for sustainability initiatives.

CCI is excited to participate in this information sharing project. Our mission is to reduce greenhouse gases through specific and measurable action, and, by sharing these resources, we hope that more ACUPCC schools will be able to implement more energy-saving projects, reducing costs and emissions.

We will be seeking feedback on what your institution needs, as well as on the tools and resources as they are made available. Please contact acupcc@clintonfoundation.org if you would like to provide feedback or have ideas about financial tools that would be of interest to ACUPCC signatories.