3FOOD

Third Industrial Revolution Consulting Group
(including conservation and onsite clean energy generation) delivered during the term
of the agreement (much like a PPA).
4. Participating organizations, ESCOs, and the Issuer enter into multi-year, Service
Performance Agreements describe conservation measures and onsite clean energy
generation, and define performance guarantee(s).
5. The issuer of the bond enters into a Program Agreement with participating
organizations and ESCOs outlining data reporting, criteria for measurement of services
and job creation.
6. The issuer issues (tax-exempt) by-appropriation bonds secured by payments under the
Instalment Payment Agreement. Alternatively, the issuer engages with loan providers to
raise the level of capital required or alternative routes for capital provision.
1.2.3 LuxSEF Challenges, Barriers, and Opportunities
1.2.3.1 Financial and Policy Conditions
As the leading center for investment funds in Europe (2 nd worldwide), Luxembourg’s financial
expertise is well-positioned to apply the SEF sustainable energy financing strategy. As noted in
the 2015 Article IV consultation by the International Monetary Fund (IMF), Luxembourg has a
stable political environment, a financial hub that serves all of Europe, and a central government
net asset position of about 20 percent of GDP which positions Luxembourg as one of two Euro
area sovereigns rated ‘AAA’ by all major rating agencies. 246
A European Commission Staff Working Document assessing the Luxembourg economy as part
of the European Commission’s annual growth survey also highlights the critical importance of
the financial sector as the main engine of economic growth. 247 However, the staff working
document reveals several weaknesses that could be of importance in the deployment of a SEF
strategy. For instance, while the existing vehicle fleet in Luxembourg is becoming greener and
more fuel-efficient, current mobility conditions are far from the government’s sustainability
objectives. High motorisation rates and the insufficient supply of public transportation – a key
objective of the Luxembourg government is to increase public transport in all motorised forms
from 14.5% in 2009 to 25% in 2020 – make mobility difficult. In terms of energy efficiency and
renewable energy objectives and targets, the document notes that further integration of smart
grid deployment is critical. Overall, Luxembourg is found to be on a path that will not meet its
246 International Monetary Fund (IMF) (2015). IMF country report No. [15/144]. Staff Report for the 2015 Article IV
Consultation. Washington, DC: International Monetary Fund.
247 European Commission (2016). Country Report Luxembourg 2016. Commission Staff Working Document
(SWD2016 84 final).
282