EIB energy lending policy Supporting the energy transformation
Original policy and video published by European Investment Bank
Executive Summary
1. To meet the objectives of the Paris Agreement, energy systems across the world must transform rapidly. This profound challenge requires significant, sustained investment in the energy sector over the coming decades. The European Investment Bank is the EU bank and one of the world’s largest multilateral financiers of climate action. It can help to foster this investment.
2. The EU continues to lead the world in tackling climate change. In 2019 it adopted a comprehensive legal framework to deliver ambitious climate and energy targets for 2030, including further reducing greenhouse gas emissions, increasing energy efficiency and promoting the use of energy from renewable sources. This framework builds upon all dimensions of the Energy Union, including energy security, a fully integrated internal energy market and research and innovation. In line with the temperature objectives of the Paris Agreement, the EU is pursuing the long-term aim of a climate-neutral economy.
3. Delivering on these EU targets requires long-term investment, the majority of which will come from the private sector. The Bank’s energy lending policy (ELP) sets out how the Bank, as a public bank, can help support the EU in meeting this challenge. It focuses the Bank’s activities on those areas in which it can provide a high degree of additional value by: (i) overcoming persistent investment gaps, which remain despite existing policies; (ii) focusing on infrastructure needed over the long term, including the important dimension of innovation and scaling up of low-carbon technologies; (iii) supporting new market-based investment in the energy sector, in particular for relatively new types of infrastructure (auctions, demand response, storage).
4. In practice, the value the Bank can bring depends significantly on the context within which it operates. The Bank therefore intends to strengthen its dialogue with Member States to explore how its lending and advisory services can be most effective in supporting national energy and climate plans. Similarly, outside the Union, in light of the nationally determined contributions, the Bank’s activities will focus on achieving the Sustainable Development Goals and the objectives of the Paris Agreement.
5. The Bank’s activities focus on four separate themes (see Figure 1). Energy efficiency investment, notably in residential buildings, needs to double in the coming decade. Despite numerous policy measures, a persistent investment gap remains. The Bank has been very active in this field for a number of years. In cooperation with the European Commission, it will establish a new European Initiative for Building Renovation (EIB-R) to support new ways to attract finance for building rehabilitation. This will examine the development of relatively new sources of energy efficiency finance, such as models of mortgage-based lending. Given the pressing need to accelerate market uptake for energy efficiency, and as an exception to its general rule, the Bank will consider financing up to 75% of eligible capital expenditures under this initiative.