European Commission opens up €24bn circular economy funding for businesses
The European Commission has announced modifications to credit access that opens up a €24bn financial funding tool for businesses looking to transition to a circular economy model.
The funding agreement InnovFin was originally designed to financially support innovation in the industrial and technological sector. In light of last week’s updated circular economy package, the funding applications have broadened and now apply to 'higher-risk, yet innovative' sustainable business models.
Karmenu Vella, European Commissioner for Environment, Maritime Affairs and Fisheries, said: "This Commission has made the transition to a more circular economy a priority of our work. And for small and medium businesses across Europe, we are committed to making that transition as easy as possible. Now one week after we launched our proposal, we have a real financial commitment.
“Today's signing of an extension of funding coverage with the EIB will help our risk-takers make that leap to a more sustainable model of production."
The funding was announced Thursday (10 December) alongside a new report from the European Investment Bank (EIB) in Luxembourg yesterday .
As well as helping middle-scale businesses establish circular economy products, the report also offers advice on the practical actions to finance the re-use, repair, refurbishing and recycling of existing materials and products.
The report suggests establishing an external platform for institutional and private investors that is available to support projects and encourage new applications. An emphasis on relations between supply chains and consumers is also encouraged in order to promote the return of unneeded or damaged products for reuse.
Werner Hoyer, President of the EIB said: “We must enable the transition towards a circular economy to unlock sustainable growth without consuming more resources, or consuming them in a smarter way - our collective future and prosperity depend on that. We at the EIB, the EU Bank, will continue to deploy technical expertise, advisory and financial firepower in support of those investment decisions which make our economies more circular, more sustainable.”
The new funding scheme has been introduced in the wake of the new Circular Economy Package which the Commission believes will bring net savings of around of €600bn, or 8% of annual turnover, for businesses in the EU, while reducing total annual greenhouse gas emissions by 2-4 %.
The circular economy package already has €5.5bn funding from the European Structural and Investment Fund (ESIF) and €650 million from Horizon 2020 (the EU funding programme for research and innovation).
Despite these potential savings, the reaction of the package has been mixed with critics arguing that the new package is 'less ambitious' than its axed predecessor.