Germany

GE-6:BMU environmental innovation programme

Policy Description

The Federal Environment Ministry provides funds from the Environmental Innovation Programme to promote demonstration projects within Germany that have large-scale reduction/avoidance potential and which can be transferred to similar systems operated by other users.

Description

The Federal Environment Ministry provides funds from the Environmental Innovation Programme to promote demonstration projects within Germany that have large-scale reduction/avoidance potential and which can be transferred to similar systems operated by other users.

 

Projects can apply for a soft loan with KfW for up to 70% of the financeable costs. Effective interest rates are from 2.73 % per year. The interest rate is usually lower than 5% and provided for a period of 5 years. KfW can decide to provide interest rates well below 5%, and for a period that is longer than the standard 5 years. The exact amount and duration are determined on individual basis by the BMU, the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety who is funding this programme. In justified exceptional cases, the Ministry may also provide an investment grant of up to 30% of the financeable costs. Participants have to arrange a collateral with their own bank, that judges the application based on its own terms. 

 

The assistance is increasingly focusing on integrated environmental protection measures. Key focus is on climate mitigation measures, including renewable energy and energy efficiency projects. However, measures in the fields of water/waste water, waste, air quality control and noise abatement are also eligible for funding. Some project examples include Top Gas Recycling (TGR) in a blast furnace installation, installing energy-efficient LED lighting, use of waste heat in a power generation plant and energy renovation of a petrol station [1], [2]

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Economic, Incentives & Subsidies

Position in the Pyramid

About Us

Participation: Voluntary

Period

Start Date: 1997

Policy Linkages

Supports EU emissions trading system (EU ETS) Effort Defining
Supports Voluntary agreements with German industry Effort Defining
Supports 30 Pilot Network Project Supporting Measure

Agencies Responsible

Federal Environment Agency (UBA)
KfW (German development Bank)

Primary Objective: GHG Emissions

Objective

­Financing major industrial demonstration projects that have large-scale reduction/avoidance potential and which can be transferred to similar systems operated by other users.

Target Group

Private companies, self-employed professionals, local and municipal authorities, companies owned and operated by municipal authorities, municipal special-purpose associations, public-private partnerships in which municipalities are the majority shareholders and other special-purpose associations or institutions incorporated under public law.

Driver of energy consumption or emissions affected by policy: Other: demonstrating potential large-scale reduction/avoidance potential

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

N/a

Quantitative Target? no

Progress Monitored? yes

Verification Required? no

Enforced? no

Sanctions: No

Requirements on the Target Group

  • Participants have to arrange a collateral with their own bank that judges the application based on its own terms.
  • Participants have to provide a regular progress reports and a final report to KfW.

Support by Government

  • Soft-loan facility
  • Payback of loan delayed till up to 5 years

Implementation Toolbox

None

Complexity of Implementation

Government

Standardised procedure, but still complicated as it is used for innovative projects. Evaluation and tailor-made funding proposal by governmental agencies (KfW and BMU).

Target Group

Standardised application consisting of project sketch and application form.

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions ­- In more than 80% of the 62 projects completed in the period 1999-2008 the project goals were achieved or surpassed. [3] ­- Of these 62 completed projects 52 participants responded to a questionnaire of which 67% mention cross-over effects (positive spill overs) to other environmental goals. ­- Prognos AG evaluated the program for the years 1999 to 2008 in 2008, on the request of the Federal Ministry of the Environment. The evaluators concluded that the program's objectives were fully achieved. The results of the funded projects provided evidence that environmental impacts could be reduced through innovative manufacturing processes. It also showed that significant contributions could be made to the development of environmental policy instruments. Prognos concludes that the targeted imitation effects (i.e. other companies that copy the experiences learned from these demonstration projects) have occurred, both at national and international level. This has brought further reductions in environmental pollution. The projects did not only achieve environmental improvements and contribute to meeting the climate protection goals of the federal government, but also provided evidence for updating of environmental legislation as well as a boost to economic and employment policy [4] ­- The isolated impact of this measure on energy efficiency and CO2 reductions in the industry sector is assumed to be fairly low. This is due to the fact that the programme finances many other environmental protection measures are financed in addition to energy conservation and CO2 reduction - so the financing available is spread out over various environmental areas. The programme also targets the tertiary sector where pay-back times often are longer. [5]
Estimated costs/benefits for industry Not available
Estimated cost for government In the period 1999-2008 about 100 projects have been funded with a total volume of about 90 Million Euro [3]

References & Footnotes

References

[1] BMU (Federal Ministry for the Environment, Nature Conservation, and Nuclear Safety), "Assistance Programmes", September 2010, http://www.bmu.de/english/government_funding/assistance_programmes/doc/46463.php , accessed 16/2/2012.

[2] KfW, "BMU Environmental Innovation Programme", http://www.kfw.de/kfw/en/Domestic_Promotion/Our_offers/Energy_efficiency_ans_environmental_protection_in_enterprises.jsp#KfWEnergyEfficiencyProgramme , accessed 16/2/2012.

[3] PROGNOS AG: Ergebnisse und Empfehlungen aus der Evaluierung des BMU-Innovationsprogramms 1999-2008, May 2010, http://www.prognos.com/fileadmin/pdf/aktuelles/100506_EvalUIP_Workshop_KfW_fuer_BMU.pdf

[4] BMU, May 2010, Evaluierung des Umweltinnovationsprogramms, accessed 16/2/2012.

[5] MURE II Industry, BMU Programme for the Financing of Demonstration Projects, http://www.isisrome.com/data/mure_pdf/industry/GER2.PDF