The European Commission and the European Investment Bank are launching a new financing instrument for projects promoting the preservation of natural capital, including adaptation to climate change.
The European Commission and the European Investment Bank (EIB) signed an agreement today entrusting the EIB with the management of the Natural Capital Financing Facility (NCFF), one of the two new financial instruments under the LIFE Programme. The NCFF will provide loans and investments in funds to support projects which promote the preservation of natural capital, including adaptation to climate change, in the Member States.Text of the news.
The EIB will contribute a total budget for the Investment Facility of € 100 – 125 million for 2014-2017. The European Commission will contribute €50 million as a guarantee for the investments, and €10 million for a support facility. Beneficiary companies and financial intermediaries will provide significant additional financing.
The main aim of the NCFF is to demonstrate that natural capital projects can generate revenues or save costs, whilst delivering on biodiversity and climate adaptation objectives. Currently there are clear barriers to the uptake of many natural capital projects, including lack of experience, long investment and project payback periods, and uncertainties about target markets, revenue streams and profit margins.
The NCFF is to establish a pipeline of replicable, bankable projects that will serve as a "proof of concept" and that will demonstrate to potential investors the attractiveness of such projects.
Eligible projects will address payments for ecosystem services, green infrastructure, biodiversity offsets and investments for innovative pro-biodiversity and adaptation businesses. The final recipients for NCFF are public or private entities, including public authorities, land owners and businesses. The size of NCFF projects will typically be between €5 and €15 million.
In addition to the Investment Facility, the NCFF also includes a support facility for project preparation and implementation for investments eligible under the NCFF.
More information on the NCFF will be available in early January 2015.