sustainable energy : the contribution of the eib · milena messori european investment bank. table...
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Sustainable energy :the contribution of the EIB
Bucharest, 12 November 2009
Milena Messori
European Investment Bank
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Table of Content
Renewable energy
EIB and the policy context1.
2.
Energy efficiency3.
4. Research, development and innovation in energy
5.
Financial instruments, Carbon funds & Technical assistance6.
Climate change
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The European Investment BankLong-term Finance Promoting European Objectives
• Created by the Treaty of Rome in 1958 to provide financing for Europe's major infrastructure projects
• Subscribed capital: € 232.4bn
• EIB shareholders: 27 Member States of the European Union
• EIB’s loans in 2009: € 55.5bn (+63% in respect to the same period of 2008)
• 19 years of activity in Romania, with lending of € 6.6bn
EIB and the policy context
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• 20% reduction of greenhouse gas emissions by 2020
• 20% share of renewable energies in the overall EU energy mix
• 10% share of biofuels in petrol and diesel for transport
• 20% reduction in energy consumption
• sustainability by promoting renewable energy sources
• competitiveness in energy supply
• security of supply by promoting diversified sources of energy
Energy: EU Policy Context
The EU energy policy promotes:
The EU has pledged to achieve:
Meeting these targets will be an enormous challenge
EIB and the policy context
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EIB contribution to EU policy objectives in the field of energy and climate change
EIB and the policy context
• renewable energy• energy efficiency• research, development and innovation (RDI) in energy• security and diversification of internal supply
(including trans-European networks)• security of external supply and economic development
EIB contribution concentrates on five priority areas:
EIB contribution to energy lending:
• in 2008, € 12.5bn (€ 11.2bn within EU-27)
• in 2009, € 9.6bn
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Renewable Energy Financing in 2008 amounted to € 2.2 bn
EIB’S Energy Financing in 2008
EIB and the policy context
Total Energy Signatures 2008 € 12.5 bn
Convent. Energy 41%
Renewable Energy 20%
Distribution 37%
Other 2%
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Table of Content
Renewable energy
EIB and the policy context1.
2.
Energy efficiency3.
4. Research, development and innovation in energy
5.
Financial instruments, Carbon funds & Technical assistance6.
Climate change
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EIB Targets for Renewable Energies
• annual target of min. EUR 800 m lending to RE projects
• at least 20% of energy projects in the EU should cover renewable sectors
• 50% of EIB lending to electricity generation associated with RE technologies
• development of financial instruments, including framework facilities, for smaller-scale investments and use of structured finance and investment funds
Renewable Energy
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EIB Renewables Finance
In 2008, EIB financed 5% of installed capacity of wind to energy sector in Europe
The RE projects fall into two groups supported by the Bank:• mature technologies – already used commercially (onshore
wind farm, hydropower, geothermal and solid biomass)
• emerging technologies – in an early implementation phase (photovoltaics, solar thermal and second generation biofuelproduction technologies)
Renewable energy
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Wind Energy projects accounted for 37% of EIB’s Renewable Energy Financing in 2009
EIB’S Renewable Energy Financing in 2009
Renewable energy
Solar28%
Multi sector27%
Wind37%
Hydro7%
Biomass1%
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Table of Content
Renewable energy
EIB and the policy context1.
2.
Energy efficiency3.
4.
1
Research, development and innovation in energy
5.
Financial instruments, Carbon funds & Technical assistance6.
Climate change
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Energy Efficiency (EE)
Energy efficiency is the most cost-effective way of reducing emissions and improving security of energy supply
EIB projects lead to energy ‘savings’ – EE as a side effect
The EIB’s EE target areas include:– Residential and commercial buildings– Transport– Electricity production & distribution– Industry
EE considerations are mainstreamed into all EIB operations, working with promoters to extend the EE potential of projects
Energy efficiency
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Energy Efficiency Lending
• Projects targeting Energy Efficiency averaged € 2.2 billion per annum (8% of total EIB signatures)
• Includes demand side and supply side projects
- Power production has focused on combined heat & power and district heating
- Smaller demand side projects (principally benefiting SMEs) supported through dedicated energy efficiency global loans
- Significant investment in automotive R&D, almost exclusively for improved energy efficiency
• Many examples of energy efficiency investments as components ofindustrial or accommodation investments
Energy efficiency
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Energy Efficiency: Policy Issues
Information and incentives:
• Low energy prices and energy metering- support tariff reforms
• Poor information about energy efficiency possibilities- Technical Advice funds when available
• High implicit discount rates for energy savings- combining grants and loans or risk sharing instruments
• Develop public transport and integration of energy considerations in urban development: - significant lending prospects in this area, including through
PPP structures
Energy Efficiency
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Table of Content
Renewable energy
EIB and the policy context1.
2.
Energy efficiency3.
4. Research, development and innovation in energy
5.
Financial instruments, Carbon funds & Technical assistance6.
Climate change
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EIB promoting the aims of the Lisbon agenda
The EIB’s Innovation 2010 Initiative supports investments in R&D and innovation promoted by public and private entities
EIB contributes in/with:
– Research infrastructures
– Financial Instruments – developed to support RDI finance
Research, development and innovation in energy
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Table of Content
Renewable energy
EIB and the policy context1.
2.
Energy efficiency3.
4. Research, development and innovation in energy
5.
Financial instruments, Carbon funds & Technical assistance6.
Climate change
![Page 18: Sustainable energy : the contribution of the EIB · Milena Messori European Investment Bank. Table of Content Renewable energy 1. EIB and the policy context 2. 3. Energy efficiency](https://reader030.vdocuments.site/reader030/viewer/2022020305/5c692a4d09d3f25c6a8c9f53/html5/thumbnails/18.jpg)
The EIB and Climate Change
Contributing by:• Financing projects that lead to gas
emission reduction or contribute to fight climate change and climate variability
• Creating and developing Carbon Markets
• Developing technical assistance facilities to support upstream activities and project preparation related to the carbon market
Climate Change
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Table of Content
Renewable energy
EIB and the policy context1.
2.
Energy efficiency3.
4. Research, development and innovation in energy
5.
Financial instruments, Carbon funds & Technical assistance6.
Climate change
![Page 20: Sustainable energy : the contribution of the EIB · Milena Messori European Investment Bank. Table of Content Renewable energy 1. EIB and the policy context 2. 3. Energy efficiency](https://reader030.vdocuments.site/reader030/viewer/2022020305/5c692a4d09d3f25c6a8c9f53/html5/thumbnails/20.jpg)
EIB Financing Instruments
• EIB’s traditional loan products• New financial instruments for sustainable energy
Financial instruments
General Terms:
• Senior loans
• Corporate Loans and Project Finance
• Loan term up to economic life of the assets
• Loan amount generally up to 50% of eligible project costs
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• > 25m € investment cost
• Direct Investment Loans
• Project could consist of single or multiple sites / sectors
• Comprehensive loan appraisal justified by project size
• Where EIB takes full project risk, loan may fall under SFF => EIB loan amount capped at 200m € (maximum amount could be lower depending on riskiness of project)
Large Scale Projects Investment
Financial instruments
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• < 25m € investment cost
• Global loans to intermediary
• Traditionally intermediaries are financial entities
EIB Strategy:
• Increase exposure to small-to-medium scale wind energy projects through:- Intermediated loans on a risk-sharing basis
Small-to-Medium Scale Projects Investment
Financial instruments
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• EIB capital under Structured Finance Facility (SFF) for non investment grade projects
- € 3.75bn facility for higher risk priority projects
- Quasi-equity / risk-taking instruments
• Risk Sharing Finance Facility
- Established with European Commission with capital of € 2 billion
- Supports investment in R&D including Energy
Technical Assistance for Sustainable Energy – Risk Facilities
Financial instruments
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Financial Instruments for Sustainable Energy – Climate Change
• Climate Change Technical Assistance Facility (CCTAF)
- A € 5 million TA facility to cover carbon crediting activities of projects expected to be financed by the EIB
- Conditional funding –reimbursable on successful registration of carbon credits meeting requirements of Kyoto Protocol
Financial instruments
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Equity Funds for renewable energy / clean energy projects
- Investment into energy projects via funds managed by professional funds managers
- First transactions cornerstone investor in Spain, Czech Republic, Portugal and Netherlands
- Further transactions with broader geographical base in negotiation with the private sector
Financial Instruments for Sustainable Energy –Equity Funds
Financial instruments
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International Carbon Funds
• Multilateral Carbon Credit Fund (MCCF)
• Carbon Fund for Europe (CFE)• EIB/KfW Carbon Purchase Programme
• Post 2012 Carbon Fund
Carbon funds
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Multilateral Carbon Credit Fund
• Co-sponsored and managed by EBRD and EIB
• Opened to:- shareholders of EBRD or EIB- private companies and other public entities (compliance /
voluntary buyers)- Fully subscribed to the value of EUR 150 million
• Aims to buy credits- from EBRD- and/or EIB- funded projects- Value added role of private sector carbon managers
• Buyers bear delivery risk and Kyoto risk
• Phasing: - Investment period 2006-2009, - Delivery period 2009-2013 (2014)
Carbon funds
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Carbon Fund for Europe
• Trust fund established by the World Bank in partnership with EIB
• Fund will purchase greenhouse gas emission reductions
• Eligible projects from either bank’s portfolio or standalone projects
• First tranche of € 50 million subscribed with 4 sovereign and 1 private participant
Carbon funds
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EIB/KFW Carbon Purchase Programme
• Risk sharing arrangement between EIB and KfW
• Focus on enabling EU based SMEs to access the carbon market for voluntary or statutory compliance purposes
• Significantly extends the carbon market to players normally excluded due to limited purchasing requirement and lower credit standing
Carbon funds
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POST 2012 Carbon Fund
• Addresses current gap in Kyoto carbon market relating to post 2012 uncertainty
• Fund will acquire post 2012 credits only, thus extending revenue stream of environmentally beneficial projects
• Banks take risk of non development of market after 2012
• EIB leading development with NIB, KfW, CDC & ICO
• €125 million committed
Carbon funds
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For more information…
http://www.eib.org/
Milena Messori, Head of Office - Romania
[email protected]: +40 21 208 6400Fax: +40 21 317 9090