Search Climate Insights Directory

This briefing by the Climate Policy Initiative examines the 'Energy Efficiency Milan Covenant of Mayors' program, an initiative administered by the Province of Milan to retrofit public school buildings using 'pure' Energy Performance Contracts (EPC). The program aims to achieve energy savings of at least 20% and annual emission reductions of approximately 9,000 tCO2, utilizing third-party financing from the European Investment Bank (EIB) and technical assistance from the ELENA program. While the program successfully tested standard EPCs in the Italian market and moved investments off municipal balance sheets, it faced significant delays and barriers due to existing bundled ESCO business models and banking uncertainties regarding energy efficiency collateral.

This report examines the potential, status, and barriers facing Energy Service Companies (ESCOs) in developing countries. It analyzes how ESCOs use energy performance contracting (EPC) to reduce greenhouse gas emissions and energy consumption, highlighting China as a major success story while identifying systemic financing, administrative, and policy hurdles in other regions.