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LIFE financial instruments

The LIFE programme for the Environment and Climate Action is expanding from providing action grants to projects and operating grants to non-governmental organisations. LIFE funding will now also be channeled through the Private Finance for Energy Efficiency, the first of two new financial instruments under this programme.

The Private Finance for Energy Efficiency (PF4EE) aims to increase private financing for investments in energy efficiency enhancing projects. Its objective is therefore to support Member States in making progress in view of the EU's agreed targets on energy efficiency. It is also aligned to the Juncker Plan (see textbox).

http://ec.europa.eu/priorities/jobs-growth-investment/plan/index_en.htm

The Commission has committed €80 million for 2014-17 anticipating an 8-fold leverage effect. The management of the PF4EE instrument is entrusted to the European Investment Bank (EIB).

The PF4EE will combine lending from the EIB to financial intermediaries with protection against losses associated with making loans for energy efficiency projects. The Financial Instrument will help intermediary banks in Member States to develop and offer specific loan programmes for energy efficiency projects. These loan programs will be aligned with the national energy efficiency action plans. The Financial Instrument will also provide support and technical assistance aiming at effectively deploying the PF4EE Instrument by increasing the technical capacity of the financial intermediaries.

Recipients

The target final recipients for the PF4EE will be private investors in Member States investing into energy efficiency enhancing projects. The beneficiaries could include SMEs and private individuals (e.g. house or hotel owners). Moreover, small municipalities or other public sector bodies undertaking small energy efficiency investments, capable of using energy savings to repay up-front borrowing could benefit from respective loan programs. The size of the energy efficiency loans to be provided to the final beneficiaries could range between €40,000 up to €5 million and higher in exceptional cases.

For more information please visit the webpage of the European Investment Bank www.eib.org/pf4ee

According to a task force report under the Juncker Plan, in most parts of Europe, the challenge remains to attract a sufficient scale of investment into improving energy efficiency from private resources. This challenge can be addressed in part through dedicated project development assistance, potentially complemented with targeted use of public resources, to share risk with private financial intermediaries. These financial instruments should go hand in hand with implementation of related legislative framework, namely the Energy Performance of Buildings Directive and the Energy Efficiency Directive. Improving access to finance would contribute to boosting demand, helping this way also the construction sector which is characterised by high concentration of SMEs and strong potential to create local jobs. Significant amounts are earmarked under the Structural Funds for energy efficiency over the next seven years. In line with the recent call from President's Juncker in its Investment Plan to get Europe growing again and get more people back to work, potential remains at both EU and national level to optimise further the use of these funds, in particular through dedicated financial instruments such as the PF4EE.

Information on the second pilot financial instrument, the Natural Capital Financing Facility (NCFF), will be online soon.


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