EC approves huge investment in China’s first energy efficiency-focused private equity fund

The European Commission announced today that Global Energy Efficiency and Renewable Energy Efficiency Fund (GEEREF) received approval in principle to invest 10 million euro in Greenstar Energy Conservation and Emission Reduction Private Equity Fund (Greenstar).

The European Union (EU) is the main investor of GEEREF. The other two investors are Germany and Norway. GEEREF is a fund of funds managed by the European Investment Fund (group EIB) to provide clean energy to emerging countries and economies in transition.

Greenstar is China’s first energy efficiency-focused private equity fund. It will invest mostly in small and medium sized projects where waste heat is recovered and utilized through electricity generation. Such projects can significantly reduce the electricity bills for energy intensive industrial companies (e.g. cement, steel and coke producers). The fund will also invest in renewable energy (e.g. solar panels on the roofs of urban buildings) and cleantech sectors (e.g. waste plastics recycling).

The Fund was initiated by Chinese Association of Resource Comprehensive Utilization (CARCU) and promoted by CARCU's Energy and Resource Comprehensive Utilization Specialization Committee (ESCA). CARCU is led by the National Development and Reform Commission (NDRC) and State-owned Assets Supervision and Administration Commission of the State Council (SASAC).

The European Commission and GEEREF believe that although China is already one of the world’s leading countries in terms of investment in the renewable energy sector, the finance mechanism in the energy efficiency sector is still evolving. Greenstar serves as a pathfinder and creates momentum to address the enormous energy-saving opportunities in China. Private equity funds such as Greenstar can contribute to both China’s demand for energy and its effort to fight against climate change.