A new window for a new instrument: Can and will green investment schemes unlock the high efficiency potentials in Eastern Europe?

According to the latest projections, “hot air”, i.e. surplus of greenhouse gas emission (GHG) allowances compared to the Kyoto commitments, will total significantly higher amounts than projected even a few years ago. Since the compliance gaps of Annex I Parties of the Kyoto Protocol are unlikely to be fully filled by credits from the Joint Implementation and the Clean Development Mechanism, this hot air will be in high demand. In order to make these allowances palatable for public opinion, “green investment schemes” (GISs) have been proposed. GISs bring reductions in emissions, using the revenues from allowance sales. The major hypothetical advantage of GISs over flexible mechanisms (FM) is that its potentially diverse architectures could overcome the liabilities of the FMs, and could focus on the highest priorities in emission reduction in the selling countries.Several countries of Central and Eastern Europe (CEE) are considering the establishment of GISs in the European Union. Due to the large amount of hot air, GISs could provide a unique window of opportunity in these countries to finance energy-efficiency (EE). The paper first demonstrates why GISs should focus on EE, especially on investment in buildings. Next, the paper warns that the majority of potential GIS architectures will not accommodate EE investments, and therefore it is essential that such a scheme is optimised to leverage EE opportunities already on the drawing board. The paper reviews briefly the potential components of GISs, evaluates them from the perspective on their potential leverage on EE investments, and suggests alternative architectures that can optimise the benefits of GISs for the selling country, as well as the planet.