Innovative funding to boost green investment on the way for 2014-2020
EU Commissioner for the Environment, Janez Potočnik was at the headquarters of the European Investment Bank to discuss resource efficiency, green infrastructure and eco-innovation with EIB's President Werner Hoyer on the 18th June. Commissioner Potočnik underlined the crucial role of the Bank in financing resource efficiency, green technologies and the development of innovative financial instruments to support the environment. Water was though the main priority when the two met. EIBs President presented the latest developments with the European Investment Fund and showed how it was planning to speed up its SME investment activity in the coming years in the eco-innovation sector. The two agreed that there were other areas where the European Commission (DG Environment) and the Bank could collaborate, in particular on the Natural Capital Finance Facility (NCFF), that will focus mainly on soil, land and forestry, and the European Innovation Partnership (EIP) on Water.
The Natural Capital Finance Facility will mostly operate through the EIB granting credit lines to commercial banks so that they can make loans for eligible projects, or by the EIB taking a share in equity funds investing in such projects. The facility will also very occasionally invest directly in projects. Eligible projects will include nature conservation, climate adaptation, sustainable agriculture, forestry and aquaculture. The regeneration of polluted land, restoration of natural sinks and recycling of organic waste will also be eligible, as will market-based instruments such as biodiversity offsetting or carbon credits for sequestration. The facility will mainly focus on pilot projects on nature-based technologies, production processes or business models, as well as proven processes for which the market is not yet sufficiently developed.
Meanwhile, the Member States’ representatives in Brussels have approved Commission plans for the LIFE budget after 2014-20 which will amount to €3bn. €764m of the LIFE programme for 2014-20 will be targeted to a sub programme on climate action, with the remaining €2.3bn to be spent on environment, resource efficiency, environmental governance and information, and biodiversity. The biggest part of the new LIFE instrument will provide funding, mainly through grants to projects from organisations established in the EU pursuing environment and climate action objectives in the Member States. One innovation is that funding will (from 2014) also be channelled through financial institutions to provide loans or guarantees for banks’ lending directly to projects. Another innovation is the possibility to provide capacity building to national and regional contact points to improve Member States performance in the Programme. A small part of the instrument will continue to provide operational grants to NGOs active in the fields of environment and climate change under which ENEP recently bid. However, a recent evaluation has shown that funds from the EU’s LIFE programme have been unevenly distributed, with Italy, Spain and Germany receiving substantial amounts from the current €2.2bn pot, while take-up in new member states has been much lower. In its recent evaluation the European Commission points to varying levels of expertise and previous experience with the programme as a cause which has led to the disparity in the number of funding applications from member states. A system of national allocations under the current phase of LIFE has failed to make much difference, but helping national contact points improve their support to applicants has achieved some success. Overall, the current phase of the funding programme has been well managed, and effective in implementing the EU’s Sixth Environmental Action Programme. The evaluation has been critical of the Commission in showing that the administrative burden of the programme has increased over time and procedures for project application are too long and complex. The good news is that this will change from next year. Finally, the rules for the implementation of the big funding budgets of Regional Policy (43% of EU budget) and the Common Agricultural Policy (39%) are now being finalised for 2014-2020 and will provide additional funds to environmental projects in farming communities and urban and rural areas (see following articles). Speaking in Lithuania after the meeting of EU Environment Ministers Janez Potočnik called on member states to grab the opportunities to finance environmental protection provided in the EU budget for 2014-20. Referring to the pledge to spend 20% of these budgets on climate-related measures he underlined how this represents “a lot of opportunities” but there is “no pre-reserved money for those purposes.