Mobilize public and private finance Sector objective: The International Renewable Energy Agency (IRENA) has estimated that it will cost $14.2 trillion by 203013 to achieve the target of doubling energy efficiency. Governments are encouraged to work with the private sector, particularly financial institutions, to increase access to financing appropriate for energy efficiency-related investments. In order to support the tripling of investment, financial institutions will need to scale up existing financial modalities (e.g. aggregation), target EMDEs and SMEs, and develop new ways to monetize the financial benefits of energy efficiency to create more investable assets. The mix of public and private financing will differ depending on industry and region. This is already happening to some degree, as shown by efforts such as nearly 200 countries at COP29 reaching a breakthrough agreement to triple financing in EMDEs from the previous goal, and to secure efforts of all actors to work together to scale up finance to EMDEs, from both public and private sources, to the amount of $1.3 trillion per year by 2035 as per the United Nations Framework Convention on Climate Change (UNFCCC).Key barriers and policy enablers: Financing for energy efficiency typically requires a different approach than financing large-scale, concentrated efforts such as renewable energy supply and grid infrastructure projects, given the different nature of energy efficiency investments compared to the typical project finance approach for large renewable energy projects. For example, some energy savings investments (e.g. in software and processes) can be financed out of operational expenses with a short-term payback. Companies also typically invest in energy savings programmes and efficiency projects (e.g. building retrofits) where the benefits for an individual project or investment are difficult to separate out from the larger programme or one individual asset. IBC financial institution members have noted that risk and pricing are the key barriers they face in increasing their level of financing, with some adding that the benefits are difficult to predict or verify. They cite the most important enabler as positive incentives for energy efficiency-related financing, particularly for SMEs. A full list of policy enablers recommended by IBC members is included in Table 3. Finance TABLE 3 Inform Support efforts to better finance energy efficiency through transparent, standardized energy saving metrics for defined interventions. Regulate Support standardized energy efficiency-related guidelines as part of broader climate or sustainable finance approaches. Promote international harmonization of energy performance contracting to enable comparability across countries. Incentivize Offer incentives for energy efficiency-related financing (e.g. tax credits), particularly for SMEs. Provide concessional financing to energy service companies to reduce the cost of doing business and improve returns on investment, with an emphasis on EMDEs. Support sustainable finance mechanisms by providing concessional or blended finance, including through MDBs, to targeted credit lines, specialized funds or risk-mitigating mechanisms such as guarantees and insurance. Develop financing for energy efficient cooking appliances, particularly for EMDEs. In 2010, the California Public Utility Commission launched a zero-interest financing programme to fund energy efficiency investment and assist non-residential energy customers to retrofit buildings. Since August 2023, the programme has also supported purchase of water heat pumps and EV charging infrastructure. Customers pay back the loans (ranging from $5,000 to $4 million) through monthly instalments on their energy bills with a maximum payback period of five years.14CASE STUDY II Public sector action in finance (financing retrofits)2Key building blocks Note: Top enablers chosen by IBC in bold Transforming Energy Demand: Accelerating Business Action through Government Leadership 10

Transforming Energy Demand 2025