European Investment Bank (EIB)

The economic and environmental challenges raised by climate change have long been recognised by the European Investment Bank (EIB) as part of its environmental priorities. As the European Union’s (EU) financial institution, the Bank supports the implementation of EU policies and has developed various initiatives aimed at mitigating climate change impacts, contributing to adaptation to climate change and climate variability, and boosting carbon markets.

Climate change considerations form part of the elements systematically appraised in the course of all EIB project evaluations. Mitigation potential is screened together with the capacity of projects to generate carbon credits. On the other hand, adaptation requirements are considered at the design stage in order to exclude any negative climate change impacts.

Financing activity and carbon funds

The EIB’s climate change financing focuses in particular on areas such as renewable energy and energy efficiency, carbon capture and storage, reduction of greenhouse gases other than CO2 in industries and utilities, and land use. Eligible projects can benefit from advantageous financing features such as longer grace periods and maturities, and the possibility of having up to 75% of the project cost financed by the Bank.

The EIB’s financing activity is complemented by its co-sponsored carbon funds as well as dedicated facilities.

To date, the EIB has launched four carbon funds in cooperation with other international finance institutions (IFIs). Each fund is designed to cover specific areas and/or carbon market players, where the EIB can either create a leverage effect or support projects and markets which would otherwise not have been developed.

Exclusively focused on promoting projects generating carbon credits from 2012 onwards, the Post-2012 Carbon Fund was launched in April 2008. With this initiative, the EIB, and four other public finance institutions (Caisse des Dépôts, Instituto de Crédito Oficial, KfW Bankengruppe and the Nordic Investment Bank), are seeking to send a clear signal of their confidence in the forthcoming establishment of a regulatory regime beyond Kyoto. With an available budget of EUR 125 million, the Post-2012 Fund is the first of its kind and has been welcomed by the international carbon community for its pioneering role in the carbon finance field.

Support for SMEs

The joint EIB/KfW (Kreditanstalt für Wiederaufbau) Carbon Purchase Programme is designed to support EU small and medium-sized enterprises in complying with their obligations under the EU Emissions Trading Scheme. Because of their limited purchasing requirements, SMEs are often automatically excluded from carbon funds. The EIB/KfW CPP is meant to favour their access to the carbon market on a risk-sharing basis between the two institutions. The fund’s initial budget amounted to EUR 100 million.

Also directed at European countries and companies with Kyoto compliance requirements, the Carbon Fund for Europe (CFE) has been set up by the EIB and the World Bank. EUR 50 million is the amount gathered together by the Fund participants – the governments of Ireland, Portugal, Luxembourg and Belgium’s Flemish Region, and the Norwegian company Statkraft Carbon Invest AS. CFE’s goal is to promote sustainable development in developing countries through clean technology investments.

Finally, the Multilateral Carbon Credit Fund (MCCF) has been created by the EIB and the European Bank for Reconstruction and Development (EBRD) with a view to developing the carbon market in countries from Central and Eastern Europe through to Central Asia. The aim of the Fund is to help its participants meet their mandatory and voluntary emission reduction targets. Sovereign participants include the Flanders Region of Belgium, Ireland, Finland, Luxembourg, Spain and Sweden while private participants are Spain’s Abengoa, Endesa, Gas Natural and Union Fenosa, CEZ (Czech Republic), and PPC from Greece. The MCCF has aggregate commitments of EUR 190 million mainly dedicated to project-based carbon credits, but also to green investment schemes (EUR 40 million).

With a EUR 5 million budget, the Climate Change Technical Assistance Facility (CCTAF) finances activities in support of project development under the Kyoto Protocol Clean Development (CDM) and Joint Implementation (JI) Mechanisms. It provides technical assistance to promoters at the different stages of CDM/JI project development and registration.

A Facility for Energy Sustainability and Security of Supply, approved in June 2007, also supports climate change mitigation by contributing to the development of carbon credit-generating projects outside the EU, which can then be acquired by the EIB’s carbon funds. This Facility provides EUR 3 billion of EIB own resources on top of the external lending mandates approved by the European Council. A joint initiative between the European Investment Fund and the European Commission is the Global Energy Efficiency and Renewable Energy Fund (GEEREF), a fund of funds launched in December 2007. GEEREF aims to attract private investment in energy efficiency and renewable energy projects in developing countries and transition economies.

Further activities are being developed in particular in the biological carbon sequestration field, where the Bank is looking into the potential for a possible European Ecosystems (Biodiversity) Investment Fund.

W: www.eib.org