EIB launches initiatives to support European climate and biodiversity challenges

The European Investment Bank (EIB) and the European Commission have joined forces to launch two financial initiatives with a €715m investment to encourage private sector involvement in schemes that reduce energy use and conserve natural capital.

The first of the two new schemes, announced this week, is the Private Finance for Energy Efficiency (PF4EE) scheme, which will receive €500m of funding to provide long-term low-cost loans and credit risk protection to financial intermediaries. PF4EE aims to lower energy bills by encouraging local banks in European countries to increase lending and to support the roll-out of national energy efficiency plans.

The scheme will be managed by the EIB while the European Commission will be providing €80m for credit risk protection of energy efficiency loan portfolios and support technical experts. Only one intermediary will be selected for support in any one country to widen the geographical benefit and priority will be given to proposals where energy efficiency investment needs are the greatest and where there is a lack of funding for such projects.

Where it matters

The second scheme – the Natural Capital Financing Facility (NCFF) – will use €125m from the EIB and European Commission to demonstrate the potential for long-term private and sector investment in green infrastructure and nature-based projects currently seen as too challenging to be viable. The scheme will look to support flood protection, rainwater recycling, programs to protect forests and reduce water and soil pollution, biodiversity offsets, and eco-tourism. 

The NCFF will start with a three-to-four-year pilot phase and is expected to finance nine to 12 operations. It will also be supported by a dedicated 40m technical assistance programme intended to improve technical understanding.

“With these new financial instruments, we are putting the money where it matters,” said the European Commissioner for Climate Action and Energy, Miguel Arias Cañete. “The new instruments will unlock significant public and private investment in key strategic areas like energy efficiency and climate protection.

“This is a contribution to protecting the climate, saving energy for our citizens and making Europe less dependent on imported energy. This is what building an Energy Union is all about.” 

Natural capital decline

The European Investment Bank is one of the world’s largest lenders for investment in climate action projects. In 2014, the EIB provided more than €19bn for climate related investment that represented around 25% of the EU Bank’s overall lending activity.

This announcement comes in the same week that a new report from the University of Cambridge concluded that addressing the UK’s deteriorating natural capital could represent a clear business opportunity for pro-active firms.

And less than a month ago, another report was published by the Natural Capital Committee; advising the UK government that England’s ‘natural capital’ is in long-term decline and must be addressed immediately to reverse the ‘structural deterioration’ of the elements of the natural environment that provide valuable goods and services.

Lucinda Dann

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