EIB financing of climate action
outside the EU
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Brussels, 18 May 2017
Business opportunities in the framework of Europe's climate
actions outside the EU Seminar
The EIB: the EU bank
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Investing in Europe’s growth
• Created in1958
• Shareholders: 28 EU
• Driven by EU policy
• Around 90% of lending is
within the EU
• Operates outside EU
through specific Mandates
EIB Group financing in 2016: EUR 83.8bn
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Total EUR 83.8bn
EIB financing supports EU policy priorities and objectives
Climate action is a horizontal objective, i.e. it is integrated in the other priority
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The Paris Agreement & EIB Climate Action
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The Paris Agreement
• Ambitious mitigation goal
• Country-led NDCs
• Explicit call for climate finance
• (Alignment with EU climate
EIB’s traditional approach based on
volume (25% target)
Increased focus outside the EU (35%
EIB’s 2015 Climate Strategy
EIB Climate Action
EIB Response: Volume (1)
• EIB has a 25% target towards climate action relative to its overall financing
• EIB provided >EUR 90bn in climate finance over the last 5 years.
• In 2016, EIB delivered EUR 19.6 bn to specific climate action projects:
Exceeded the 25% financing target towards climate action.
Remained the largest MDB in terms of support to climate action.
EUR 1.9 bn were channeled to developing countries.
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EIB Response: Increased Focus outside EU
In the lead up to COP-21, the EIB committed to increase its climate finance
for developing countries to 35% by 2020.
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EIB Response: Climate Strategy
Complementing EIB’s volume-driven approach, EIB’s 2015 Climate
Strategy will help implement the Paris Agreement inside and outside the
EU by focussing on three key-areas:
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Reinforcing the impact of
Building resilience to climate
Further integrating climate
change considerations across
EIB standards, methods and
Engaging the Private Sector is Key
There is no doubt that the bulk of the investment
needed to address climate change will have to
come from the private sector
As part of its Climate Strategy, EIB will identify
operation types with a particularly high financial
impact and/or high mitigation or adaptation
gains, focusing on:
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Financial innovation and mobilisation of private
Capital markets investors.
Blending with public funds.
Increased pipeline of climate action projects
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EIB lending instrument
For Investment Grade operations
EIB special activities
For Low and Sub Investment
What can the EIB do? – Financing Instruments
The EIB has an extensive range of instruments to finance public and private
sectors at investment and sub-investment grades of risk to its disposal.
What can the EIB do? – Innovative Products
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Encouraging private and public sector commitment of
investment, project implementation and management
Enhancing the investment market complements other
initiatives and additional sources of funding (including
In addition to the more traditional financing products, EIB offers a number of
innovative climate finance products coupled with technical and financial advice to
engage the private sector to achieve:
Broader eligibility of expenditure and in the use of funds for equity,
debt and guarantee investment
Encouraging private and public sector commitment of investment,
project implementation and management experience
Enhancing the investment market complements other initiatives
and additional sources of funding (including institutional investors)
EIB expertise and rigorous due diligence help meet the highest
How to best engage the private sector?
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Do not crowd out other sources of funding
(public and private!)
Enable the private sector to do things that it
otherwise would not be able to do
Focus on leveraging public funds to engage
the private sector
BUT: do not re-invent the wheel
→ many mechanisms already exist!
Project example: Lake Turkana Wind Project - Kenya
The site, covering 40,000 acres, is located in in northern Kenya.
The wind farm will have an installed capacity of 310MW and includes 365
turbines, a 33 kV electricity grid system, and a 33/200 kV substation and
related utility services including civil works, housing and buildings.
The project is on course with full capacity expected to be achieved in June
With EUR 625 million project costs this makes it the single largest wind
power project to be constructed in Africa and is, to date, the largest private
investment in the history of Kenya.
EIB loan of EUR 200 million and EUR 25 million contribution from EU-ITF
(EU-Infrastructure Trust Fund) under Sustainable Energy for All Window
This is an example of blending: EIB lending combined with EU funding.
14 European Investment Bank
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Project example: Vientiane Sustainable Urban Transport-
• Construction of a Bus Rapid Transit (BRT)
system in Vientiane:
11.5 km of dedicated bus lanes
21 enclosed stations
acquisition of 96 new BRT buses,
which should meet a minimum EURO IV
emissions standard (clean technology).
• The project will also set up a city transport agency and improve pedestrian
facilities near bus stations.
• The project will benefit from an EUR 20 m EIB loan and from TA provided by
the EIB and funded through a EUR 5m grant provided by the EU Asian
• As a result of the project, it is expected that bus passengers will save 1.5
million hours per year and local pollutants will be significantly reduced.
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Project example: IIFCL Energy Sustainability & Climate
Action Framework Loan - India
• Framework loan to support renewable energy and energy efficiency
investment projects that contribute to climate change mitigation.
• RE projects eligible for financing include grid connected wind parks, solar PV,
biomass, hydroelectricity and may include transmission lines that evacuate
renewable electricity production. EE projects include electricity transmission
and distribution investments that meet the EIB’s energy efficiency criteria.
• Borrower: India Infrastructure Finance Company Limited (IIFCL), a wholly
government owned entity mandated to provide long term finance to viable
infrastructure projects by extending long-term subordinated and senior loans
as a junior partner of financing consortia led by commercial banks.
• EIB loan = EUR 200 m
• A second phase of this facility is expected to be approved later this year.
•02/06/2017 •19•European Investment Bank
Example fund of funds: GEEREF
The Global Energy Efficiency and Renewable Energy Fund is sponsored by
the European Union, Germany and Norway and advised by the European
Investment Bank Group
GEEREF is a fund of funds that invests in private equity funds which invest on
renewable energy and energy efficiency projects in emerging markets,
thereby further enhancing the leveraging effect of GEEREF's investments.
Launched in 2008 with an initial capital of EUR 112 million
The Fund currently manages € 222 million, which could mobilised over € 10
billion through the funds in which GEEREF participates and the final projects
in which these funds invest.
GEEREF had invested in 13 funds across Africa, Asia, Latin America and the
Caribbean as of May 2017.
•20•European Investment Bank
MGM Sustainable Energy Fund
GEEREF has committed € 10.0 million to the MGM Sustainable
Energy Fund, managed by MGM Innova Capital LLC
MSEF is a private equity fund providing equity and mezzanine
financing to projects in the demand-side energy efficiency and
renewable energy sectors in Colombia, Mexico, Central America and
the Caribbean region.
The fund will seek to invest 70% of its committed capital in energy
efficiency projects (residential sector: consumer financing for green
appliances; commercial sector: hotels, hospitals, other large buildings;
municipal sector: street lighting); and 30% in renewable energy
projects (proven technologies including hydro
expansion/rehabilitation, solar and wind).
Example of GEEREF portfolio
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Project example: FEMIP Sustainable Energy Facility
FEMIP Sustainable Energy facility aims at providing credit lines to local
Financial Intermediaries (FIs) in Jordan and Morocco to finance energy
efficiency and small renewable energy investments in the industrial, SMEs,
agribusiness, commercial services and residential sectors.
The project, which is co-financed by the EBRD (Lead IFI), AFD and KfW,
will contribute to the reduction of greenhouse gas emissions and the
enhancement of security of supply.
EIB loan = EUR 35 m
So far two intermediary banks:
• Banque Centrale Populaire (Morocco)
• Banque Marocaine du Commerce Exterieur
EUR 1.9 bn to developing countries represents 27% of total lending to those countries.
The EIB will finance USD 20 billion a year globally for the next five years (2016-2020) under its recently announced climate strategy commitments, equal to at least 25% of its overall lending for the period.
The EIB aims to increase its lending for climate action in developing countries to 35% of total lending (in developing countries) by 2020.
The EIB will only finance up to 50% of any project: however, since IIFCL exposure to the total project cost is limited to 20%, EIB could finance IIFCL whole exposure to the individual allocations/projects.
Total project cost = EUR 1 bn