Sustainable energy : the contribution of the European Investment Bank

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Sustainable energy the contribution of
theEuropean Investment Bank

• Structured Finance for
• Energy Environment

Christopher Knowles
Marseille, 17th March 2009
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THE EUROPEAN INVESTMENT BANK

• The European Unions financing institution ...
• Created by the Treaty of Rome in 1958, to provide
  long-term finance for projects implementing the
  EUs policies
• Subscribed capital 232.4bn as of 1.4.2009
• EIB shareholders 27 Member States of the
  European Union
• 2008 Lending 57.6bn Borrowing 59.5 bn

EIB and the policy context
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ENVIRONMENTAL SUSTAINABILITY

• Climate change initiatives, sustainable
  development and social welfare
• Minimising adverse environmental impact in all
  projects
• Direct loans of 15.7bn in 2008 for
• mitigating climate change
• promoting waste management and sustainable use of
  natural resources
• improving the urban environment
• reducing pollution
• protecting biodiversity
• Total loans of 68bn since 2004

EIB and the policy context
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ENERGY AND ENVIRONMENT EU POLICY CONTEXT
Environmental sustainability

• Energy accounts for 80 of greenhouse gas
  emissions in the EU (European Environment
  Agency)
• EU Commitment 20 reduction of GHG emissions by
  2020 compared to 1990
• EU target Renewable Energy to account for 20
  of EU energy mix by 2020 (up from less than 7
  in 2005)

Security of supply

• Diversification of energy sources
• Securing geographical diversification

Lisbon Agenda

• Employment and competitiveness in the low carbon
  economy

EIB and the policy context
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Renewable Energy Financing in 2008 amounted to
2.2 bn
EIBS ENERGY FINANCING IN 2008
Renewable energy
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Wind Energy projects accounted for 34 of EIBs
Renewable Energy Financing in 2008
EIBS RENEWABLE ENERGY FINANCING IN 2008
Renewable energy
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WIND FINANCE IN CONTEXT

• To date, EIB financed 5 of installed capacity of
  wind to energy sector in Europe
• Focus on medium / large onshore and offshore
  demonstration projects
• Offshore todate 1300MW with 960m actively
  looking at a pipe of some 4000MW
• Developing new initiatives for the onshore wind
  sector

Renewable energy
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Global new-build asset financing by sector Q1
2006 Q4 2008
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MA activity by sector in Q4 2008 versus Q4 2007
NOTE The figures have been adjusted for
estimated size of deals where no value was
disclosed. The numbers in brackets refer
respectively to the total number of disclosed
deals, and the total number of deals.
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European Onshore Wind Project Debt Spreads(Basis
Points Over Euribor)
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Layer Cake showing estimated annual interest
cost for Euro area Onshore Wind Farm
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Leverage average debt as a percentage of total
project cost, Q3 2007 and Q1 2009
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NEW COURSES OF ACTION

• An EU Sustainable Energy Financing Package
• EE, RE, TA, Smaller Actors, Municipalities, SMEs
• Maximise leverage effect of EU financing
• Financial Support of EU SET (Strategic Energy
  Technology Plan)
• Objective to accelerate deployment of low carbon
  demos
• 1st gap analysis 2nd implement financing
  measures e.g. CCS
• Financial Support for Clean Vehicle RD
• Special Facility and RSFF to ensure sustained RD
  despite slowdown
• Hybrid, electric, hydrogen

Financial instruments / Carbon funds / Carbon
Capture Storage
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EU response (bn EUR extra/year)
plus MS boosts of 1.5 of GDP (EUR 170bn)
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European Energy Programme for Recovery (EEPR)

• EEPR proposes to use 3.5bn (from 5bn) for energy
  projects
• Security of supply EU value added
• Shovel ready - Funds must be used
• 2009-2011
• Geographical balance
• Proposal still needs Council and EP approval

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CONTACT STRUCTURED FINANCE AND ADVISORY / AGI-EU
Chris Knowles, knowles_at_eib.org James Ranaivoson,
ranaivos_at_eib.org Kristin Lang, k.lang_at_eib.org Mart
in Poulsen, poulsen_at_eib.org Melchior Karigl,
karigl_at_eib.org Peter Coveliers, covelier_at_eib.org