The European Investment Bank (EIB) has an important role to play in bringing EU policies and targets to life – and in the new member states of central and eastern Europe there is enormous potential for the EIB to step in and make a difference on clean and reduced energy initiatives. Yet to date, as Bankwatch’s recent ‘Carbon Rising’ study has documented, only six percent of all EIB investments into renewable energy and 16 percent of energy efficiency investments were made in the new member states.

In autumn 2011 at the first-ever meeting between the EIB’s board of directors and civil society representatives, the management of the bank hinted that they are well aware of this shortcoming. Although the EIB is looking for more opportunities to finance renewable energy and energy efficiency measures in the EU12, according to bank officials there are problems with absorption capacity, demand and there is only limited interest from financial intermediaries in the region to handle such targeted funds. Perhaps it is now time for the EIB to stick its head out of the box and look for new ways to support the necessary shift in the EU12. Although for the most part still in a deep slumber, the potential is there as is apparent in the case of the Czech Republic.

The Czech Republic is about to conclude a long running discussion on a national energy strategy for the forthcoming years. As the bulk of its fleet of coal powered power plants is soon to retire, the country has to come up with a clear vision of where to head next. Although the debate has not been straightforward, it has resulted in increased engagement by various stakeholders. Many, including civil society organisations, municipalities as well as several business associations. are calling for increased efforts especially in the area of energy efficiency.

The Pačes commission, a group of academics and energy experts asked by the Czech government to prepare a basis for the new energy strategy, has shown that the potential of energy renovation of housing and the possibility of heat generation from renewable energy sources (mostly biomass burning) alone account for more than the combined consumption of coal and gas used for heating in housing.

Even though it is only one piece in the jigsaw puzzle, renovating housing stock to make it more energy efficient is a good example of how carbon friendly measures, when well designed, can have a positive effect on the economy as a whole.

For starters, such measures boost employment throughout the country. Just the production of efficient biomass-fired boilers alone provides employment for over 1500 people, more than is provided by Litvninosvka uhelná, one of the larger coal extraction companies in the Czech Republic that is considered to be a significant employer in its region. Furthermore, it helps to significantly cut bills for both households and municipalities and, finally, helps to decrease dependency on energy supplies from unstable regions and would prevent European politicians from having to cut energy deals with often obscure, undemocratic regimes such as the one in Turkmenistan.

By halving oil and gas imports and freeing the country from dependence on coal and nuclear energy, the Czech Republic could achieve an 88 percent reduction in carbon emissions by 2050, and it is likely that similar scenarios exist in other countries of the region. The main responsibility for making these changes happen lies with the national governments. Nevertheless, the EIB can help to speed up the process by elaborating suitable financing mechanisms for energy efficiency and renewable investments in the region and help the countries to overcome lack of funding for energy efficiency improvements in the face of tough austerity measures and budget cuts. Is the bank up for the challenge?