The European Commission and the European Investment Bank are launching two new financial instruments to drive investment in energy efficiency, efforts to preserve natural capital, and adaptation to climate change. The instruments will unlock public and private investments by combining EIB funding with financing under the EU LIFE Programme for Environment and Climate Action.
The first instrument – Private Finance for Energy Efficiency (PF4EE) – aims to increase private financing for energy efficiency projects designed to help Member States achieve the EU's agreed targets on energy efficiency. The Commission has committed €80 million for 2014-17, anticipating an 8-fold leverage effect.
The PF4EE will combine lending from the EIB to intermediary banks in Member States with protection against losses associated with making loans for energy efficiency projects. It will be complemented by technical assistance to financial intermediaries.
The instrument targets SMEs, private individuals, small municipalities and other public sector bodies undertaking small energy efficiency investments. It will be implemented through banks in Member States. The size of the loans could range between €40 000 up to €5 million or more in exceptional cases.
The second instrument – the Natural Capital Financing Facility (NCFF) – will provide loans and investments in funds to support projects that help preserve natural capital, including adaptation to climate change. Eligible projects will include payments for ecosystem services, green infrastructure, biodiversity offsetting and investments for innovative pro-biodiversity and adaptation businesses.
A budget of €100-125 million is available for the period up to 2017. The European Commission provides up to €50 million as a guarantee for the investments with an additional grant support facility of €10 million for technical assistance.
Recipients for NCFF could include public and private entities, including public authorities, land owners and businesses. Project size will typically be between €5 and €15 million.
At any time, potential project developers can contact the EIB to express an interest in the facility and discuss the suitability of their ideas. Proposals will be considered for approval by the Bank, after satisfactory due diligence and selection by the Bank, within the constraints of the available budget.
EU Commissioner for Climate Action and Energy Miguel Arias Cañete said: "With these new financial instruments, we are putting the money where it matters. The new instruments will unlock significant public and private investments in key strategy areas like energy efficiency and climate protection. This is a contribution to protecting the climate, saving energy for our citizens and making Europe less dependent on imported energy. This is what building and Energy Union is all about."
EU Commissioner for Environment and Maritime Affairs Karmenu Vella said: "The Natural Capital Financing Facility will help potential investors to access finance to invest in projects that benefit nature and help adapt to climate change. The new Facility projects will pilot innovative ways of financing biodiversity and make it crystal clear that protecting nature can also generate revenue and save costs."
PF4EE and NCFF complement the EU Investment Plan, addressing the large potential at EU and national level to further optimise the use of public and private funds.
The instruments will mobilise public money to generate new private investment, without creating new debt. They will help remove market barriers by investing in projects that would not be funded otherwise because they are perceived as too high risk.
By doing so, they will demonstrate that investments in low-carbon technology and resource efficiency sectors not only pay off in the longer term, but also contribute to achieving EU's 2020 goals in resource efficiency, biodiversity and climate action, putting Europe on the path of sustainable growth.