The European Investment Bank Group (EIB Group) said it will support an initial investment of €30 billion ($30.2 billion) in loans and equity financing to move the European Union (EU) away from fossil fuels and toward cleaner forms of energy over the next five years.
The EIB board of directors on Oct. 26 said a package of new and targeted financing is expected to mobilize as much as €115 billion ($115.9 billion) of new investment by 2027. The board on Wednesday said its support of the REPowerEU Plan—a strategy introduced in May of this year—will help Europe as it tries to end its dependency on Russian-sourced fossil fuels in the wake of Russia’s invasion of Ukraine, which has caused upheaval in global energy markets.
EIB officials said its funding will be directed to renewable energy resources, energy efficiency measures, power grid upgrades, energy storage, electric-vehicle charging infrastructure, and what it calls “breakthrough technologies,” such as low-carbon hydrogen. The group has long supported the EU’s energy sector, investing about €10 billion ($10.1 billion) per year on average over the past 10 years.
“This horrible war and Russia’s blackmail over gas supplies affirmed that our dependency on fossil fuels is a critical security vulnerability,” said Werner Hoyer, president of the EIB Group, in an emailed statement to POWER on Wednesday. “It’s about time we finally ended this dependency. The EIB is determined to mobilize the full scale of its financial resources in support of the joint effort, and work with the private sector to maximize the impact of our investment.”
Ursula von der Leyen, president of the European Commission, in a statement said, “I welcome the EIB’s financial reinforcement of our REPowerEU Plan, on top of the €300 billion funds already available. With today’s EIB package, we can go even faster in cleaning Europe’s energy system and ending our dependence on Russian fossil fuels. The EIB Group’s contribution will help us ensure our energy security and reach our 2030 climate goals.”
A news release from EIB on Wednesday said the additional financing should improve Europe’s energy security over the next few years, and “avert future supply shocks.” The group said its support for energy efficiency projects “could result in lower demand for gas already in 2023.”
Support for Clean Energy, Climate Action
The financing comes after a board decision Wednesday to approve €5.5 billion ($5.6 billion) in financing for clean energy, energy efficiency and climate action. Those funds include money to support new wind power projects in the Baltics, and upgrade electricity transmission networks in Poland and Spain.
The EIB board also adopted several technical and policy measures focused on speeding the pace, and maximizing the impact, of the new funding. That includes higher upfront disbursements of funds, “longer tenors that will make EIB loans to the energy sector more attractive, and a co-financing ceiling of up to 75% for projects contributing to the REPowerEU objectives, up from the typical 50% EIB limit per project,” the group said.
The EIB board also introduced a temporary—and what it called an “exceptional”—extension of the exemptions to the EIB Group’s Paris Alignment for Counterparties, or PATH, framework. The group said “the existing exemption under the EIB Group’s PATH framework for projects with high innovative content will be temporarily and exceptionally extended to include all renewable energy projects and electric-vehicle charging infrastructure inside the EU. This will allow EIB Group financing of a greater number of clean energy projects with a wider range of clients and utility companies contributing to the EU’s climate objectives and energy security. The extension will run until 2027, subject to a Climate Bank Roadmap review foreseen in 2025. Over this period the EIB will continue to engage with all its clients to support them in developing decarbonization plans.”
The EIB is the long-term lending institution of the EU. It is owned by the EU member states. The EIB Group has adopted a Climate Bank Roadmap, designed to prop up the group’s agenda to support €1 trillion ($1.1 trillion) of climate action and environmental sustainability investments by 2030, and to deliver more than 50% of EIB finance for climate action and environmental sustainability by 2025.
The group noted that as part of the roadmap, all new EIB Group operations have been aligned with the goals and principles of the Paris Agreement since the start of 2021.
—Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).