Since there are no currently active contests, we have switched Climate CoLab to read-only mode.
Learn more at https://climatecolab.org/page/readonly.
Skip navigation
18comments
Share conversation: Share via:

Erik Duhaime

Nov 17, 2012
06:43

Staff


1 |
Share via:
Very interesting! Has this work been posted anywhere else in more depth that you might include a link for? And has there been any evolution in your thinking or updates you might want to add? And on another note, do you have suggestions for how the template might be better formatted so that your proposal could fit into it? -Erik

Millie Begovic Radojevic

Nov 21, 2012
01:50

Member


2 |
Share via:
Proposal
contributor
Erik Thanks so much for the comment! We are currently completing a prototype of the scheme in a municipality in the northern part of Montenegro where after a competition, we selected the 4 households that comparatively had the most striking socio-economic conditions of all (very poor and vulnerable). So next week we do the end energy audit to compare with the pre-reconstruction status. This gives us a sense of the savings vs investment (we'll see if the findings confirm our initial research that was detailed in the proposal). so we'll have something to report in 1-2 weeks. There are couple of issues that we're still thinking through (and we'll continue until we start getting first households through the process). The business model when initiative scaled up (who comes up with the up-front investment that has relatively low interest rate, especially in this environment), enforcement (if a household isn't upholding the agreement, what type of an enforcement is appropriate/feasible), re-investment of recovered tax (once municipalities start recovering the real estate tax and legalization fee, how do we ensure that re-investment of those goes into 'green' areas). Again, thanks so much for the comment. We'll come back soon with the report on our prototype and we certainly welcome ideas as you can see we're in thinking phases :) Best Millie

Millie Begovic Radojevic

Mar 4, 2013
09:14

Member


3 |
Share via:
Proposal
contributor
Erik, much later than i had hoped, but we have some results from our prototype and they are more than exciting!! i'll copy paste the blog post (http://www.undp.org.me/home/2013/mili/index.html) here: Innovation means never having to look for new ideas in your field: Several months ago a colleague of mine wrote about our idea to legalize thousands of informal homes in Montenegro using energy efficiency measures (or see the infographic for a visual show off the idea). We have been working on urban planning issues in Montenegro for almost a decade, but it was only when we had colleagues of different background looking at the problem- energy, economy, urban planning, communication, community engagement- that the solution came out. In short: Problem: over 100,000 illegal homes in Montenegro (if normally distributed would imply that every other household lives in an illegal home) that household don’t have an incentive or funds to legalize. UNDP idea: savings on energy bills would be re-invested into legalization and energy efficiency measures that created savings in the first place. Directly, we tackle informal settlements and high energy intensity in Montenegro (8.5 times higher than in the EU). The proposal is a testament to the title of the blog (which is a quote by Jack Hughes of TopCoder). The MIT ClimateCoLab invited us to submit the idea as an innovative method for tackling climate change. My colleague Jelena Janjusevic and I were invited to present the concept at the 3rd International Symposium on Sustainable Development, local papers wrote about it and people tweeted how it sounds neat. The problem was that our idea was just that- an idea. So we decided to get our hands dirty and turn our idea into a prototype. We wanted to test whether energy efficiency measures can create sufficient savings on energy bills that could offset legalization and infrastructural costs. If it didn’t work, well we would have found another way how not to do it. Bijelo Polje, a municipality in the impoverished northern region of Montenegro took a leap and partnered with us. After posting a call for interest, 4 households were selected for testing our idea, based on a variety of socio-economic indicators- we wanted to work with the most vulnerable members in the community. The results of the prototype are striking: For a 100m2 house, a €5000 investment in energy efficiency measures creates €830 savings on the energy bill per year (or 63%) with energy savings of 37.900 KWh. The payback period at current energy prices is 6.12 years. An important note: energy prices in Montenegro are almost ½ of average EU prices. In other words, as energy prices grow, the payback period will shrink. The savings were sufficient to cover both legalization and energy efficiency measures in a way that the idea was expenditure-neutral for families. In other words, a family didn’t have to cash out a single euro more the month after the reconstruction but their energy bill was lower, they had a title to their home, and better quality of life. We were intrigued by results, so we wondered: what impact on the economy could we have if we scaled our idea up to all 100,000 homes over 10 years? My colleague Jelena conducted the economic analysis in order for us to answer this question and before we show the results, two disclaimer points in regard to the analysis: one, this model can apply to only one type of illegal home- the one where the owner has built a house on their own land but doesn’t have the necessary permits (this is indeed the most dominant type of illegality but not the only one); and two, the macro-economic analysis is done using extremely conservative estimates that do not account for indirect results (e.g. how could we account the impact on health system and overall productivity as a result of improved living conditions?). Scaling up the idea would require a direct investment of around €470 million in the construction sector over. On annual basis, this implies 14% of the current level of construction sector in Montenegro. This level of investment would result in a 1.5% increase in GDP annually over 10 years relative to 2012 GDP levels. The implementation of the scheme would require some 60,000 jobs in total (existing and new), which exceeds the current employment base in Montenegro and signifies the need to import labor. VAT-related revenues would amount to €8 million or 2.5% of the current VAT income annually over 10 years. The energy savings (not accounting for the rebound effect in the aftermath of energy efficiency measures) would amount to 347 GWh, reducing the annual import needs by 27%. Assuming energy consumption remains constant Montenegro would become an energy exporter after less than 4 years. This idea would generate a minimum of €500 million for local governments from the legalization costs over 20 years (20 years being a payback period) or around €2 million on monthly basis. So where are we now? We have a model that works and that has tangible results on many levels. There are several questions that we need to work out in order to scale the idea: Where will the initial investment come from? There are several possibilities, most preferred in our opinion is an ESCO company but the Government could consider taking a low interest loan or investing itself (though in the financially strained environment, this isn’t very likely to happen). What are the next steps? We would like to move from 4 to about 50 to 100 homes, preferably in a single neighbourhood. We believe that the results would stand out in a more effective way and clustered way, and we also believe that it would allow us to learn as we’re doing but still on a relatively small sample of households. The Government of Montenegro is fully invested in the model. We have few interested private sector companies and international financial institutions, including EBRD but we are on the lookout for other partners. Get in touch if you’re interested!

michael5

Mar 11, 2013
02:59

Member


4 |
Share via:
This is really interesting. I wonder about enforcement mechanisms that government will use with this scheme? Arguably if they havent found a way to force citizens to legalize by now, how do you expect they would force them to apply in this scheme? I am sure you have answers, though i had to ask. otherwise i find your proposal elegantly simple and brilliant. I can see its application all across Latin America, and expanding to measures from EE to renewable energy - from saving energy to actually creating and then selling it. You have got my firm vote, and i hope you go through with the proposal on to the event and presentation. It seems like a promising scheme that would get more support as you go along. Michael

Millie Begovic Radojevic

Mar 22, 2013
06:26

Member


5 |
Share via:
Proposal
contributor
Dear Michael, thanks so much for your comment! Enforcement mechanism is arguably a reason why we are where we are with this issue though i think this time around the government is really making sure that everyone is on the same page in terms of the rules of the game (what can be done, how it is to be done), with support to households both that have illegal homes (for a variety of reasons, some having nothing to do with the household itself) and those with legal homes but who wish to pursue energy efficiency measures. So, there is a lot of support for solving this issue from all corners, that enforcing the non compliance (enforcement mechanisms are all encapsulated in just adopted new law), shouldnt be an issue. BUt then again, we will be able to see how it works out once we scale up! thanks again Millie

Tom Raftery

May 9, 2013
08:27

Member


6 |
Share via:
Hey Millie, a question - unless I'm mis-reading this (entirely possible), the households are now paying around €90 per month for electricity. After legalisation, they'll be paying roughly €89.9 for electricity, loan and property tax. I can see benefits to everyone, except the householder. There is no financial saving. Sure, their house is more energy efficient, and they are now legal, but those are not a tangible benefits if they are not saving money. There's obviously more to this than I'm seeing at first glance. What am I missing?

Millie Begovic Radojevic

May 10, 2013
04:36

Member


7 |
Share via:
Proposal
contributor
Tom, at the moment we are at an impasse as the citizens have very little incentive to legalize their homes (they've got energy connection, waste disposal facilities, etc) while the price for legalization is very high (Montenegro being one of the most in-debt countries in the region, with the growing unemployment) thus very few families would venture out to get a loan (at incredibly high interest rates) to pay for legalization. However, those who do not pay in the coming period are facing some pretty drastic penalties. So with the scheme, without having to pay any extra money on the monthly basis, the household get to have a title to their home (which can serve as a collateral, for example, for a business loan), better standards of living, and the Gov't gets to have a steady revenue stream that it can reinvest in municipal infrastructure. The energy prices in the country have gone up almost 40% in the last 2-3 years, and they are still about 80% less than what the average EU citizen pays (the liberalization of the energy market will happen in the region over the next few years). So the scheme will increasingly become more profitable for the citizens. And in the northern region (relative to central and southern, features 2x higher poverty and unemployment levels), this scheme will provide legal empowerment to the poorest. Maybe to sum up, our intention wasnt to create financial savings for the households- this is merely an indirect benefit and will become more so with energy prices going up. Our primary concern were households living in illegal homes they, for number of reasons, cant/wont legalize. So our intention was to try and create some financial room through savings on energy bills that could offset legalization costs (and EE retrofit costs). Hope it makes more sense? Enough to get your vote :) Millie

2013buildingefficiencyjudges 2013buildingefficiencyjudges

Jul 8, 2013
09:02

Judge


8 |
Share via:
Dear elami5, Thank you for your submission and congratulations on your selection as a finalist for the final judging round. We thought that your proposal was very strong and that your focus on a specific place (Montenegro) was a strength because it increases the chances of actionability. However, our advice for the final round would be to include some comment on how this method may be applied in other places as well. In addition, even if you do not use the proposal template, we hope that you will take a close look at the questions asked in the template and try to make sure each has been addressed in your final proposal.

Millie Begovic Radojevic

Jul 19, 2013
04:43

Member


9 |
Share via:
Proposal
contributor
Thank you. Proposal edited. Best.

2013buildingefficiencyjudges 2013buildingefficiencyjudges

Jul 29, 2013
02:35

Judge


10 |
Share via:
Comments from Judges are listed below: - Really like how they scaled up the investment and explored several climate and economic metrics. Also like how they explored financing mechanisms. The pitch could be clarified, it assumes the reader knows a lot. It may be the word "formalization”—that term may not be familiar to many readers. It sounds like the customer doesn't realize energy savings because they are offset by the costs of "legalizing" the house; however, increased comfort, health, and safety benefits are huge and would make a great pitch for homeowners (especially if they have children with asthma, allergies, mold aversion, etc.) - It would be nice to see them explore some kind of utility bill payback mechanism (on-bill financing), so the customers don't feel the pain of the payment. Also, the government could support a pay for performance financing model in conjunction with an ESCO, another palatable option for consumers. How does the project deal with "rebound," where as households spend less on energy bills, they can now afford to add A/C and other high usage electronic appliances into the home? What is the educational component? - This is actually doable and has the intriguing linking of energy savings, building retrofits/improvements, institutions (e.g. formalization of illegal buildings), and workforce development. Climate improvement + all three Es of sustainability. - This one seems to be the most innovative in terms of implementing low-tech, efficacious improvements to buildings providing services to the most needy. Has big implications around the world in both developed and developing countries. - Promising approach to get at a significant portion of the energy savings potential in the building stock. Would need an aggregator to combine multiple small projects and make the energy upgrades cost effective. - This solves a problem that is seen world-over in emerging economies.

Alberto Cottica

Aug 5, 2013
11:27

Member


11 |
Share via:
Well crafted and not that hard to generalize. Well done!

Eric Harris

Aug 7, 2013
12:38

Member


12 |
Share via:
Millie, Are the occupants of the houses being displaced during retrofitting. Does this pose challenges to rolling it out on a larger scale? Are there similar efforts in surrounding Balkan states? Also, aside from a more energy efficient home, what are the tangible benefits to a family, say in Bar, of "legalization" once achieved? E

Millie Begovic Radojevic

Aug 7, 2013
01:30

Member


13 |
Share via:
Proposal
contributor
E, thanks for your comments! Retrofits take anywhere from one to few weeks to complete(this depends on the extent of the works done, size of the house, etc), but it is performed without displacing families. EE retrofits are being done on scale all over the world, but we havent found (and would be grateful if we could actually get intel on some) any information about savings from energy efficiency being used as a deliberate policy option to incentivize another action (in our case offseting costs of legalization). Once a family gets a title to their home, they can use it as a collateral for example- it provides security and dignity on one, and a host of health, safety, and comfort benefits (these come from retrofitting). Thx again for your comment and support! :) Millie

Keith Vonborstel

Aug 16, 2013
10:08

Member


14 |
Share via:
I wonder if you could explain what "Using energy efficiency as an incentive for formalization of illegal buildings in Montenegro" means?

Millie Begovic Radojevic

Aug 17, 2013
04:58

Member


15 |
Share via:
Proposal
contributor
Keith, thanks for your question. What we mean is that at the moment (prior to this scheme), the citizens had little incentive to legalize because they didnt have the money and they were connected to all the utilities, and the government didnt have incentive to enforce the law too stricktly for a number of reasons- they know people simply dont have the money to pay the tax, in many cases it isnt their fault that they havent gotten the necessary licences, and so on. SO our idea is to create financial savings for the households through energy efficiency retrofit of their home (so their utility bill is lower the month after retrofits are completely) and to take those savings and allocate them directly to pay for legalization and the cost of energy retrofit loan. In the end, the family doesnt pay any more money the month after retrofit but they get a title to their home and a higher level of comfort in their house. Hope that helps? Millie

Peter Ottensmeyer

Aug 26, 2013
11:59

Member


16 |
Share via:
Millie, this is a fly-by-night scheme that isn’t going to work because of human nature. Right now you have illegal buildings that are energy inefficient. You mention drastic penalties if legalization does not take place, but the government is not enforcing any rules anyway. So as a homeowner-squatter I would just love to have someone pay to make the house energy efficient and to legalize it at no cost to me. Once that is done I will have a lower energy bill, which is all that I will pay. There is no incentive for me to pay more, i.e. the original energy bill level. As a now legal homeowner I will say thank you very much, now please go away. How will you enforce my paying more, if you don’t/can’t do anything now. This is utopian thinking on the basis of having a compliant population. You don’t have that.

Millie Begovic Radojevic

Aug 26, 2013
12:37

Member


17 |
Share via:
Proposal
contributor
Dear Sceptic (and i do love the name!) thanks for the comments! funnily enough, all points you raised we (thought about/factored in) tried to incorporate into the scheme, so ill take them one at a time: - Enforcing rules: government's position on enforcing rules is not a fixed notion but changes throughout the time (on an off change that what im saying is obvious) and it depends on a number of internal/external factors. For example, a government may be more reluctant to enforce rules on legalization if at the moment it is gearing up for elections. Conversely, it may be more prone to enforce the rules if it is battling budget shortages. So the case isnt so much that the government can not but would not enforce certain rules- this could be true of any country in transition, i would imagine. In any case, we try to incorporate this into our analysis and come up with a solution that require enforcing the rules for the most drastic offenders (those who refuse any type of a scheme) and that puts the government in position to offer to citizens a solution that considers a wealth of factors (for example, in some cases, i could live in an illegal house through no fault of my own- the municipality may not have financial resources or technical know how to complete the urban documentation that would result, among others, into a use permit for my house). - human nature: our assumption was that any scheme that would cost additional euros to families would be a no go, as a result of a number of factors: overall development levels, poverty/income levels, in-debt levels of the population, etc etc. if even faced with the type of a scheme that would offer such deal citizens dont sign up, it would also put government in an easier position to crack down on offenders (irrespective of the cause of illegal nature of the house). Lastly, while there sure are homeowner-squatters among the population, the majority of citizens we have come across in our research actually view the illegal nature of their household as an incredible burden and given the adequate scheme, would welcome a way out of it. - enforcement of the scheme: there are several factors that are taking place at the moment that will make enforcement of a number of rules easier, for example introduction of smart energy meters that can enable energy companies to turn off energy access without having to go out in the field. to be completely honest, this is probably the weakest part of the scheme not because of its logic but because we simply havent had a chance to test it out in the field comprehensively yet... and it is one part of the scheme that will most likely require testing several models out and seeing which one works best under any given set of circumstances. Hope this answered some of the issues you've raise, and definitely earned us a Sceptic's vote :) Millie

Hayat Khan

Aug 30, 2013
03:02

Member


18 |
Share via:
Very interesting initiative.