Dozens of top European banks to trial new green mortgages

European banking giants including BNP Paribas, ING Bank and AXA have joined forces to launch a new green mortgage scheme which focuses on helping consumers drive energy efficiency.

37 of the largest banks in the continent will offer the mortgage products, in a trial of the World Green Building Council’s (WorldGBC) new European energy efficiency criteria.

The standard requires all new builds to meet national “nearly zero-energy building” standards, as required by the European Commission, and states that renovated properties must achieve a 30% reduction in energy demand and provide a new Energy Performance Certificate (EPC).

The pilot scheme, launched today (June 14), will see participating banks explore lower interest rates for mortgages meeting the scheme’s criteria over a period of one to two years, with a view to establishing a sector-wide drive towards mortgage products that help consumers achieve energy use reductions.

WorldGBC chief executive Terri Willis said the commitment by almost 40 of Europe’s leading banks to trial the mortgage scheme “shows green building is hitting the mainstream”.

“There is no better private financial instrument to embed energy efficiency into than the mortgage; the most widely known and cheapest form of finance for homeowners,” WorldGBC’s Europe Regional Network’s director James Drinkwater added.

low-carbon banking 

A string of UK high street banks have increased their investments in green building projects and products in recent months. Barclays this year launched its Green Home Mortgage scheme, offering homebuyers preferential interest rates and savings of more than £1,300 on energy-efficient new build houses.

The firm has additionally launched new green trade loans to help companies secure working capital for activities such as renewable energy, energy efficiency and waste management projects. Meanwhile, Lloyds has pledged a further £2bn of funding for sustainable investments, increasing its total UK green finance commitments to £3bn.

In March, banking giant NatWest pledged to deliver £10bn of lending to UK renewable energy and energy efficiency projects by 2020, having provided £3.5bn for renewables and energy efficiency projects over the past three years.

The new mortgage trial launches just days after WorldGBC called for a net-zero building sector by 2030 and weeks after UK Prime Minister Theresa May vowed to halve the energy use from new buildings in the same timeframe.

Greener buildings

WorldGBC’s Europe network is one of the key partners behind the Energy Efficient Mortgages Action (EeMAP) initiative, which aims to help meet the €100bn shortfall in annual investment for energy efficiency in buildings that is required to meet the EU’s climate targets. 

In the EU, buildings account for around 40% of energy use. The built environment sector‘s energy consumption levels are set to skyrocket in the next 35 years, with the global building stock expected to double to 415 billion square metres.

The cornerstone of the EeMAP initiative, which seeks to green the continent’s €7 trillion mortgage market, is the assumption that energy efficiency has a risk mitigation effect for banks and a cost saving effect for customers.

The EU-funded scheme is being jointly led by the WorldGBC, E.ON, European Mortgage Federation-European Covered Bond Council and several European universities.

“Green mortgages have the potential to unlock an energy efficiency revolution by enabling homeowners to access affordable finance through which to improve their homes,” E.ON’s chief executive Michael Lewis said.

“We are proud to be involved as a leading partner in the EeMAP initiatve and believe that the pilot phase launched today offers a great opportunity for banks, utilities and energy efficiency experts to work together to turn a great vision into reality.”

Sarah George

Comments (1)

  1. Chris Rickerby says:

    Ecology Building Society have been supporting energy efficient homes since the 1980s and continue to fund such projects. It’s about time the big banks recognised the importance of supporting such projects.

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