A number of Europe-wide sources of funding are available to help businesses comply with environmental legislation. The European Commission administers some sources of funding directly, but more often they are channelled through national or local authorities.
LIFE+ is the EU’s main funding mechanism to ensure environmental policies are put into practice. Any legal person established in the European Union can submit a proposal, , i.e. public authorities, other public bodies, private businesses and organisations such as NGOs.
Projects that support the implementation of the Environmental Compliance Assistance Programme for SMEs (ECAP) are eligible for funding under the programme.
SMEs have been significant beneficiaries in previous LIFE programmes – with some €30m assigned in 2003-2004 to developing innovative techniques in businesses through demonstration projects.
Valid examples are coordination bodies for environmental management systems, such as EMAS regional assistance programmes offering audits and guidance for companies, sector-specific initiatives and the training of business support networks.
There are a number of funds allocated by the European Union to support less developed regions (Structural Funds) and help the integration of European infrastructure (Cohesion Fund). They account for a large part of total EU funding and spending.
Both mechanisms, in particular the Structural Funds, allow for substantial investments in environmental protection, especially for SMEs to promote environmentally friendly products and production processes. Environmental criteria are priorities in two of the four Structural Funds – the European Regional Development Fund and the European Social Fund.
Most of this EU funding is paid via national and regional authorities. Therefore Member States should allocate substantial and sufficient resources to these objectives in their programming documents and in their applications for EU Structural Funds for the period 2007-2013.
The Cohesion Fund is aimed at Member States whose Gross National Income per inhabitant is less than 90% of the EU average.
For the 2007-2013 period, the Cohesion Fund concerns Bulgaria, Cyprus, the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia and Slovenia. Spain is only eligible for a phase-out fund as its GNI per inhabitant is less than the EU-15 average.
The Cohesion Fund finances activities to improve the environment related to energy or transport. Examples of projects eligible for funding are those supporting energy efficiency, renewable energy, rail transport, public transport or trans-European transport networks.
The European Regional Development Fund (ERDF) was created to reduce regional economic differences and strengthen competitiveness, innovation, create sustainable jobs and promote environmentally sound growth.
To qualify, projects must improve environmental protection, be linked to economic development and satisfy some of the following criteria:
This has a strong emphasis on SMEs. Some €430 million is allocated between 2007 and 2013 for investments in eco-innovation activities. The Intelligent Energy Europe (IEE) sub-programme includes €727 million for energy efficiency and renewable energy projects.
The Commission’s Environmental Technologies Action Plan (ETAP) promotes clean technologies to the benefit of SMEs indirectly; for example, innovative SMEs will have access to independent assessments of their technological innovations, as well as to training to develop skills in environmental technologies.
Other useful links (external):
The EU’s Seventh Framework Programme for Research (FP7), its main R&D funding programme, prioritises environmental projects and encourages SMEs to participate. FP7 (2007-2013) has an entire theme dedicated to environmental protection under its ‘Co-operation’ programme.
SMEs are actively encouraged to enter and form consortia to apply for FP7 funding. The ‘Capacities’ programme aims to strengthen the innovation capacity of SMEs in Europe and boost the development of products and markets using new technologies.
In order to ensure the European added value of FP7 projects, most actions have a trans-national character. For example, research projects often involve a consortium of partners from different European (and other) countries, while FP7 fellowships require mobility over national borders.
Other useful links
The Collective Research Networking scheme (Cornet) is funded through FP7 for 2008-2010. It offers financial support for transnational research based on national or regional programmes and involving cooperation between national or regional ministries and agencies.
Cornet is targeted at consortia of SME associations, SMEs and research institutes. Calls are issued twice a year. The Cornet website provides support for finding partners.
The Eureka ‘Eurostars’ programme provides funding for small businesses’ innovation projects.
The programme is aimed at SMEs that invest at least 10% of their annual turnover in research. Projects can address any technological area – including the environment – but must have a civilian purpose and be aimed at the development of a new product, process or service.
Eurostars projects must be collaborative, involving at least two organisations from two different participating countries. Applications are open on an on-going basis.
The European Investment Bank (EIB) lends money to commercial banks at attractive rates to support their lending to small businesses. Partner banks are required to loan EIB funds to SMEs at favourable rates, adding an equivalent amount from their own funds. For each euro provided by the EIB, the partner bank loans at least two to SMEs, thereby creating a leverage effect.
It finances independent SMEs with fewer than 250 employees in the 27 EU Member States, for expenditures necessary for a small business to develop. Enterprises from most economic sectors are eligible for funding on very small projects to investments with a maximum cost of EUR 25 million, of which EIB’s contribution cannot exceed EUR 12.5 million.
Developed in cooperation with the European Commission, the Joint European Resources for Micro to Medium Enterprise (JEREMIE) offers the possibility to Member States to create a Holding Fund (HF), and within it to transform part of their EU Structural Fund (SF) allocations and national resources into various financial instruments to facilitate access to finance to eligible SMEs. JEREMIE Holding Funds, acts as an umbrella fund, by allocating resources to selected financial intermediaries and SME-focused financial instruments to support SMEs by means of on-grant instruments such as equity or venture capital investments, loans and guarantees. In order for eligible SMEs to benefit from JEREMIE resources, they must approach those financial intermediaries that will be selected by the EIF.
The European Commission helps to improve the financial environment for small businesses by using funds from its Competitiveness and Innovation Framework Programme (CIP) to guarantee loans extended to SMEs by a range of financial institutions involved in SME lending. The EC entrusts CIP funds to the European Investment Fund (EIF) to establish guarantees in support of SME finance. Under the CIP, two different types of financial instruments are implemented by the EIF:
The high growth and innovative SME facility (GIF)
The total amount invested by the EIF will depend on the stage of development of the SME, providing risk capital for SMEs in their early stages (GIF1) and in their expansion phase (GIF2):
The SME guarantee facility (SMEG)
SMEG provides loan guarantees to encourage banks to make more debt finance available to SMEs by reducing the banks' exposure to risk. SMEG provides four guarantees to financial intermediaries providing SMEs with loans, mezzanine finance and equity: