The Group, which consists of the Bank itself and the European Investment Fund, has this week published its figures for 2022. They confirm that the Group signed a total of €72.5bn during the calendar year.
Of this total, a record €17.06bn, around 23% of the total, was allocated to projects and initiatives supporting the energy transition. The European Union (EU) has pledged to end Russian fossil fuel imports by 2027 and, to reach this goal, has set out a series of policy and regulatory interventions under its RePowerEU package.
First introduced in spring 2022, the package has set into motion new measures to improve energy efficiency via building fabric improvement and behaviour change; to increase the share of renewables in the energy mix and to electrify heat, transport and heavy industry There are also commitments to diversity gas supply in the short-term and to scale biomethane and low-carbon hydrogen in the longer term.
In addition to the energy transition spending, the EIB Group has classed a further €19.4bn of its financing in 2022 as “green”. This term also covers things like nature-based solutions, electric transport and – controversially – some nuclear and gas activity.
The Group had committed to ensure that at least half of finance was “green” by 2025 and has achieved this three years ahead of schedule. It claims it is “well on track” to achieve its objective of supporting €1 trillion in green financing during the 2020s, especially given the EU’s plan to introduce new and improved subsidies for cleantech and to simplify planning and regulations for facilities contributing to the low-carbon transition.
More detail on the plans, first floated in January, was outlined earlier this week. The bloc has proposed an initial ridging solution of around €250bn – the majority of which will be drawn from existing funds that will be repurposed – under its new ‘Green Deal Industrial Plan’. This will be built upon with a new Sovereignty Fund that will support emerging clean technologies to the point of commercial maturity.
This finance is being brought forward partly in response to the US’s Inflation Reduction Act, which details $369bn of subsidies for climate action. The Act is the largest of its kind to date and will enable the US to reduce its annual domestic emissions by at least 40% by 2030, against a 2005 baseline. But the EU has been concerned that it would render Europe-made cleantech such as electric cars less competitive.
Commentators say that there are a lot of details still to be revealed about the EU’s Green Deal Industrial Plan, including which technologies will be covered and how technology neutrality can be maintained. The next meetings to decide further details and next steps for the Plan are being held on 9 and 10 February and then at the end of March.
“At a time when the US is rolling out the biggest green subsidy programme in history, it is imperative that Europe keeps up and stays the course, both for the sake of our planet and for safeguarding the competitiveness of our economies,” EIB Group president Werner Hoyer said. “The EU bank will do its part to finance home-grown innovation that will lead us to net-zero.”
Green bonds in the spotlight
In related news, the European Central Bank has confirmed that it will favour bonds issued by more environmentally sustainable organisations, or bonds with a strong green or sustainability link, to retain as it starts running down its portfolio of bond holdings.
In a process set to begin in March and conclude in June, the bank will run bonds off its balance sheet at an average pace of €15bn per month. It has confirmed that bonds from corporate issuers with a strong environmental track record are more likely to be retained.
The Bank has also stated that, while it will mainly stop buying new bonds issued by private sector entities by March, it will consider future purchases of green bonds. It will also tighten its requirements around green bonds, in a bid to ensure it does not become an “accomplice” to greenwashing, president Christine Lagarde has stated.
There have been questions around whether the move is bold enough, given that the Bank’s total holdings exceed €300bn. Some Bank board members had proposed actively selling non-green or ‘light green’ bonds and replacing them with ‘darker’ green options.
A decade of exponential growth in green bond and sustainability-linked bond issuance stalled in 2022, the Climate Bonds Initiative has confirmed this week. But it is also predicting a ‘stellar’ rebound for 2023. Read edie’s full story here.