European Investment Bank (EIB) president Werner Hoyer signalled that it expects to play a key role in supporting the new EU Green Deal Industrial Plan proposed by European Commission president Ursula von der Leyen earlier this week.
Financing of climate action and environmental sustainability reached a record €36.5bn ($39.8bn), or 58% of the bank’s total financing in 2022, well ahead of a target to reach more than half of green financing in 2025, the EIB stressed.
A large part of that sum, €17bn, went into the financing of sustainable energy projects such as renewables, efficiency, storage and grids inside the EU, as the bank began rolling out a special support package for the REPowerEU plan to end dependency on Russian fuel imports.
“We delivered on our promises, we exceeded our targets, we put our money where our mouth is,” EIB President Werner Hoyer said.
“The EU bank is deploying the full scale of its financial firepower to cushion the economic fallout from Putin’s unjustified aggression and lay the foundations for a sustainable recovery.”
The widening green financing by the EIB comes at a time when the economic bloc is not only confronted with Russia’s aggression on Ukraine, but also President Joe Biden’s gigantic Inflation Reduction Act (IRA), which includes a hundreds of billion dollars in indirect subsidies via tax breaks to green tech manufacturing under the condition that companies mostly produce in the US.
To counter a possible exodus of green industries to other world regions such as the US, European Commission President von der Leyen on Wednesday presented her vision of a ‘Green Deal Industrial Plan’. It is aimed at speeding up the expansion of renewable energy and green technologies in Europe – including an easing of state aid rules to enable higher subsidies – in a bid to “level the playing field” with the US.
As financially wobbly EU countries such as Italy fear they could be outmatched by stronger northern economies such as Germany in a subsidy race, von der Leyen has also proposed to set up a new ‘European sovereignty fund’ to finance incentives across the EU.
She suggested that fund in a first step is filled with rechannelled money from other EU funds as a ‘bridging solution’, but how the fund should be filled sufficiently in the longer run is yet unclear as northern EU member states reject more shared European debt.
This is where more low-interest EIB financing could step in.
“At a time when the United States is rolling out the biggest green subsidy programme in history, it is imperative that Europe keeps up and stays the course, both for the sake of our planet and for safeguarding the competitiveness of our economies,” the EIB's Hoyer said.
“The EU bank will do its part to finance home-grown innovation that will lead us to net zero.”
Charles Michel, president of the European Council (the meeting of the EU’s heads of government), last month in an opinion piece in German media had already suggested EIB financing to fill the sovereignty fund as a ‘realistic alternative’ to new common EU debt.
EU member states at a 9 February meeting are to discuss the proposals of the Green Deal Industrial Plan. The Commission will use their input then to shape a more formal proposal to be presented at the European Council in late March.