Refinancing EuroPACE loans in the European Fixed Income Market

The report concludes that the US model of ABS securitisation for PACE loans is not directly applicable to Europe due to regulatory differences, a lack of historical performance data for 'Simple, Transparent and Standardised' (STS) treatment, and diverse national legal frameworks. Instead, it recommends localised solutions such as covered bonds, residential mortgage-backed securities (RMBS), and aggregation platforms. The document provides a global market analysis of green bonds for low-carbon buildings and outlines standardisation principles for energy efficiency loans to attract institutional capital.

• The US PACE model, which has issued USD 5.7bn in bonds, relies on an 'on-tax' financing structure where loans are repaid via property tax additions, a mechanism that is only available in some European jurisdictions.
• Standardised ABS securitisation across Europe for EuroPACE loans is deemed unfeasible because of heterogeneous property and consumer lending laws across member states and the lack of historical data required for STS (Simple, Transparent and Standardised) regulatory capital treatment.
• In Europe, covered bonds are a more viable and established alternative to ABS for refinancing, particularly in Germany, Austria, Spain, and the Nordics, due to their dual-recourse structure and superior credit ratings.
• The report identifies specific European countries with high green bond allocations for low-carbon buildings, with France (USD 17.8bn), Germany (USD 13.5bn), and Sweden (USD 10.9bn) among the top issuers.
• To attract institutional investors, the report proposes standardising energy efficiency loans through fixed performance targets, upfront due diligence, and the use of template contracts to ensure homogeneity.
• The report suggests that making energy efficiency loans senior to mortgages would likely face strong opposition from existing mortgage providers and could lead to increased mortgage rates.
• Alternative aggregation methods, such as the NAB Low-Carbon shared portfolio in Australia, demonstrate that loans can be pooled into investment vehicles without full securitisation.

APA

Giorgi, A., & Filkova, M. (2020). Refinancing EuroPACE loans in the European Fixed Income Market. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/EuroPACE-2.3-Refinancing-EuroPACE-loans-in-the-European-Fixed-Income-Market.pdf

Chicago

Giorgi, Amanda, and Monica Filkova. Refinancing EuroPACE loans in the European Fixed Income Market. Climate Bonds Initiative, 2020. https://www.climatebonds.net/files/documents/publications/EuroPACE-2.3-Refinancing-EuroPACE-loans-in-the-European-Fixed-Income-Market.pdf.

Wikipedia

{{cite report |last1=Giorgi |first1=Amanda |last2=Filkova |first2=Monica |title=Refinancing EuroPACE loans in the European Fixed Income Market |publisher=Climate Bonds Initiative |date=2020 |url=https://www.climatebonds.net/files/documents/publications/EuroPACE-2.3-Refinancing-EuroPACE-loans-in-the-European-Fixed-Income-Market.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{giorgi2020refinancing, author = {Giorgi, Amanda and Filkova, Monica}, title = {{Refinancing EuroPACE loans in the European Fixed Income Market}}, institution = {Climate Bonds Initiative}, year = {2020}, url = {https://www.climatebonds.net/files/documents/publications/EuroPACE-2.3-Refinancing-EuroPACE-loans-in-the-European-Fixed-Income-Market.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }