Amsterdam has invested in over fifty projects in the areas of climate, sustainability and air quality through two revolving funds totalling approximately EUR 30 million (USD 32 million)23. These two funds — the Amsterdam Climate & Energy Fund (AKEF) and the Sustainability Fund — support the New Amsterdam Climate Plan, which sets a target to reduce the City of Amsterdam’s GHG emissions by 40% by 2025. 

The Amsterdam Climate & Energy Fund (AKEF) offers primarily subordinated loans ranging from EUR 500,000 to 5 million (USD 532,000 to 5.3 million), while the Sustainability Fund supports smaller, local projects up to EUR 500,000 (USD 532,000). 

Value: The combined capitalization of the AKEF and the Sustainability Fund is EUR 85 million (USD 90.4 million) – EUR 45 million (USD 48 million) for AKEF to support projects that generate a financial return of at least 8%, and EUR 40 million (USD 43 million) for the Sustainability Fund to support smaller, low-risk projects with a financial return of 2%. 

Structure: Both the AKEF and Sustainability Fund are structured as revolving funds, and all profit and revenues are reinvested within 15 years to fund additional sustainable energy production, energy efficiency, or circular economy projects2

1. Amsterdam Climate & Energy Fund (AKEF) 

The AKEF supplies risk finance like subordinated loans and is run by external fund managers. The AKEF was established in 2013 to supply risk finance, primarily in the form of subordinated loans. External fund managers known as ‘e3’ run AKEF, including three portfolio managers and one professional fund manager. e3 comprises three different partners – EWIC, Privium Fund Management and Libertus Energy Finance – with a track record of managing sustainable project investments. The City of Amsterdam has no influence over investment decisions, as an independent Investment Committee supervises the fund managers and must approve all investment decisions proposed by the fund managers. The Investment Committee is comprised of five experts on investments, public sector finance, and energy efficiency. The City selects two of five board members, both of whom must not be affiliated with the city government, while e3 selects the remaining three. 

The fund has invested EUR 25 million (USD 27 million) so far, in a range of commercial large-scale projects. Each loan typically ranges between EUR 500,000 – 5 million (USD 532,000 to 5.3 million). These investments target companies and large energy efficiency and sustainable energy production projects. AKEF provides mostly subordinated loans offering a minimum return of 8% for projects that offer reductions of at least 30 kg CO2/EUR over fifteen years. The fund may also offer guarantees and equity. 

Examples of the projects that AKEF has financed include the second largest solar roof in the Netherlands at the time of construction (Amsterdam Arena25), electric vehicle lease company, biofuel and biomass generation, green gas (OrangeGas26) generation and distribution, solar lease companies, a vertical farm, and sustainability installations for a large new building development. AKEF also currently has multiple investments in its pipeline. 

2. Sustainability Fund 

The Sustainability Fund provides smaller, low-risk, non-commercial loans and is managed directly by City of Amsterdam civil servants. The fund offers loans of to up to EUR 500,000 (USD 532,000) at a standard 2% interest rate. Co-financing with the private sector is incentivised by offering a 0.5% interest rate discount when 33% or more of the project financing comes from a non-governmental entity (e.g. a bank, crowd funding, own funds). 

The Sustainability Fund was originally part of the Amsterdam Investment Fund (AIF), established in 201127. Amsterdam launched the AIF as a strategic financing tool with the dual aim of supporting the city’s environmental commitments while encouraging city residents to make investment proposals. One fifth of the AIF was committed to social projects emphasising the social co-benefits of GHG reductions, like reduced energy bills for residents and businesses. 

In 2015, Amsterdam formally separated out the segment of the fund set aside for social projects to create the Sustainability Fund, and terminated the original AIF. The new Sustainability fund has EUR 40 million (USD 43 million) to lend specifically to local sustainability projects that offer direct GHG reductions. 

The Sustainability Fund’s operations launched in January 2016, housed within the Sustainability Office of the City of Amsterdam. The fund provides loans to local projects that provide clear GHG reductions, supporting a variety of stakeholders and organizations like building owners, schools, sports clubs, theatres, and social housing corporations and small enterprises. Over 75% of loans are used for solar energy projects, but the fund has also financed aspects of heat and cold storage, insulation, and energy efficient furnace projects. Companies seeking to finance projects can also receive loans, but, for regulatory reasons, they cannot use money for “commercial investments” that improve their competitive position. This stipulation has the added benefit of minimizing the risk that the loan is not repaid. 

In addition to energy saving and production projects, the fund is experimenting with loans for advancing the circular economy. As these projects are typically the core business of relevant companies, the aforementioned competition stipulation makes it harder to fund circular economy projects. 

Initially, the Sustainability Fund received a low number of applications for loans. In response, the fund created a program to provide potential applicants from targeted sectors free energy audits (‘energy scans’). The city pays for independent energy advisors to assess prospective projects, estimating a building owner’s potential to save on energy costs or generate renewable energy. The advisors also help owners assess investment options by getting quotes from suppliers and assisting with loan applications. These energy auditors are, by design, not in the business of installing solar to prevent conflicts of interest and build confidence among potential applicants. 

To date, this approach has been quite successful in identifying additional projects. New projects financed as a result of these services include the installation of LED lights and solar panels and the creation of systems at a sports club to turn off freezer facilities and stadium lights when the space is not in use, among others. 

All projects that the fund finances must contribute to the aims of the Sustainability Agenda approved by the City Council in 2015. Projects worth between EUR 200,000-500,000 are judged according to the environmental effect per euro invested and the amount of co-investment involved, with higher levels of co-investment generating a better rating. This competitive element helps to incentivize improvement on the proposals. Projects under EUR 200,000 must only demonstrate they clear a hurdle of 1 tonne of CO2 per EUR 35 (USD 37) saved. Before a loan is agreed upon, the business case must be robust. The energy savings and or revenues from selling energy resulting from a project should be enough to pay interest and amortisation. 

Borrowers must repay Sustainability Fund loans within 15 years. So far, no funded projects have failed to meet their financial obligations. 


The AKEF and Sustainability Fund have invested in over 65 projects in the field of climate, sustainability, and air quality totalling over EUR 30 million (USD 32 million), which translates to nearly EUR 30,000 (USD 32,000) per day.

Reasons for success – AKEF 

  • Amsterdam was successful in identifying a gap in the financing available for commercial sustainability projects, and AKEF was able to fill this financing gap with commercial loans. 
  • As the market has evolved and traditional lenders have entered the sustainability financing sphere, AKEF’s fund managers have kept the fund agile and responsive. AKEF has shifted away from predominantly funding the ‘low hanging fruit’ of sustainability like solar energy, as debt from mainstream lenders has become far cheaper since the fund’s establishment. AKEF has instead started to specialize in financing more innovative projects with a long-term view, which require more research, time, and assistance from fund managers. 
  • AKEF has learned that investing time and resources in project preparation, particularly in the case of innovative and untested project types, yields a higher success rate. Business owners often focus on strategy or product development, and pay less attention to building a comprehensive financial plan for the company’s development. Banks will not invest the effort required to develop solid business plans in cooperation with these prospective loan applicants and therefore will not fund these projects. Without the AKEF fund managers pushing for the ‘professionalization’ of the proposals, many project proposals would not come to fruition. As part of AKEF’s mission is to fund projects with an environmental benefit that cannot receive funding through other means, making this investment in project preparation contributes to the fund’s overall success. 

Reasons for success – Sustainability Fund 

  • The city financing low carbon projects provides a clear signal to banks, which are still reluctant to invest in these projects. Energy efficiency projects are particularly attractive, as they provide a reliable return on investment through the savings they generate. 
  • Communications play a key role. The city allocates money to increase the fund’s visibility through a variety of means: a dedicated website, community and local newspapers, social media, project launches, and other events attended by key staff and media. 
  • Installation companies and stakeholder networks that promote sustainability are important partners that can help identify project opportunities. 
  • The fund builds capacity among potential applicants to establish a consistent pipeline of projects to finance. Free energy audits help demonstrate the financial benefits of energy production or energy saving projects to building owners. This service helps relevant stakeholders decide to invest in sustainability measures for their buildings. 
  • Traditional financiers typically do not undertake investments under EUR 100,000 (USD 106,300). The Sustainability Fund offers loans as small as EUR 10,000 (USD 10,630), enabling smaller projects to proceed with affordable financing. 
  • Applications for loans are often poorly substantiated. To help, an easy-to-use, business case Excel template is made available on the website, including examples of successful applications. 
  • Prospective applicants can always contact the fund team for help and guidance. 
  • To increase the speed of implementation for projects that involve multiple partners, a subsidy of up to EUR 15,000 (USD 16,000) is available to hire an advisor to write a project plan and manage the project. 

When/Why a city might apply an approach like this 

Amsterdam’s approach to a city climate fund has been particularly effective in engaging the community to make green finance available for a more diverse group of stakeholders. The city has created loan funds to finance projects that are too small to qualify for traditional financing, making energy efficiency retrofits and renewable energy projects more affordable for SME’s and individual residents. Amsterdam is also investing in projects and companies with risk profiles or returns that have less historical precedent and are therefore more expensive to finance through traditional means, like circular economy businesses and innovative renewable energy technologies. The choice to offer specialized technical assistance and free energy audits has further benefited the city by demonstrating an on-going commitment to engage with and support city stakeholders, while securing a pipeline of viable projects to fund.

Additional instruments 

Although technically not part of the Sustainability Fund or AKEF, Amsterdam also maintains the Amsterdam Energy Loan. This provides low interest loans to homeowners, Homeowners Associations (HOA), and small private landlords for works such as solar panel installation, which make up 75% of the projects, insulation, and projects without a positive business case like window frame renovations. Energy loans range from EUR 5,000 to 15,000 (USD 5,300 – 16,000) per household. There is no minimum GHG savings requirement. 

Amsterdam has found, however, that homeowners and other groups eligible for such loans have not taken advantage of this program at the scale the city government expected. The city has noted that residents feel little urgency to take the steps to install solar or conduct energy retrofits. In response, Amsterdam is currently considering new incentives for solar deployment as well as policy instruments that will make it easier for residents and other small-scale electricity consumers to install solar panels. 

Finally, Amsterdam co-funded three rounds of the Rockstart Accelerator Smart Energy-program. This is an annual intensive programme lasting six months in which ten sustainable energy start-up enterprises from around the globe receive training, mentoring, legal, financial and fiscal support and the chance to pitch their ideas to investors. The companies offer 8% of their shares in return for programme participation.

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The AKEF and Sustainability Fund have invested in over 65 projects in the field of climate, sustainability, and air quality totalling over EUR 30 million (USD 32 million), which translates to nearly EUR 30,000 (USD 32,000) per day
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