The European Investment Bank (EIB) Group has achieved a record €17 billion of green financing in 2022. It is likely to keep it on track to achieve its €1 trillion goal by 2030, which could be instrumental in making the EU more competitive amid the green transition.
- The EIB Group’s financing of climate action and sustainability projects reached a record in 2022.
- It plans to focus on Europe’s energy security and its competitive positioning in clean tech, in support of the new Green Deal Industrial Plan.
- The group expects to maintain its record pace of financing, keeping it on track to reach its €1 trillion target of green financing by 2030.
The EIB Group, which comprises the European Investment Banks and the European Investment Fund (EIF), is the largest multilateral financial institution in the world and the lending arm of the EU. As the bloc’s climate bank, the group has set a target of providing €1 trillion in climate action and environmental sustainability investments by 2030.
All of this funding will be aligned with the principles and goals of the Paris Agreement, with all plans laid out in its Climate Bank Roadmap. Part of this roadmap was to end all funding for fossil fuel projects by the end of 2021, yet funding for gas distribution projects in the interim period has drawn sharp criticism from climate activists.
According to a report by climate NGO Counter Balance, the EIB continued to fund gas infrastructure projects even though the EIB president had declared that funding for gas was over. Activists were concerned about two issues: prolonging the use of gas, and the risk of owning stranded assets. The bank’s position, however, may be justified by the fact that natural gas was designated as a sustainable fuel in the EU Taxonomy.
The bank is also committed to helping the European Green Deal succeed, which includes helping the bloc reach its Fit for 55 goal, or achieving a 55% or more reduction in its greenhouse emissions by 2030. In addition to direct lending, it also provides credit guarantees which have helped finance several large deals that may have otherwise been prohibitive for individual banks to fund by themselves.
What drove the EIB’s record financing in 2022?
In 2022, the group’s financing activities were dominated by providing relief for Ukraine, supporting small businesses as they continued their recovery from the COVID pandemic, and ending Europe’s dependence on Russian gas. These drove total group financing to over €72 billion.
Financing for renewables, energy efficiency, storage and grids, exceeded €17 billion as the bank unveiled support for the REPowerEU plan, which is part of its commitment to making sure Europe had access to affordable energy amid the energy crisis.
In addition to providing €1.7 billion in relief funding for Ukraine, 46% of the bank’s financing was allocated to projects that improve equity and cohesion in the EU. The bank also exceeded its 2025 target of at least 50% of financing being directed to green projects, as it reached €36.5 billion, or 58% the total, in 2022.
The EIF, which serves as a venture fund for the EIB Group, provided over €9 billion, or 27% of its financing total, to small businesses and climate and infrastructure projects, which is aimed at enhancing the digital transformation and competitiveness of European industry.
Having financed €222 billion for green projects since 2021, the group appears to be on track to reach its €1 trillion goal by 2030. Supporting the European Green Deal is part of the EIB Group’s mandate, which includes working with the public sector and National Promotional Banks and Institutions to implement the deal and NextGenerationEU, jointly supporting the public and infrastructure sectors.
Supporting the European Commission’s Green Deal Industrial Plan
The EIB Group also supports the objectives of the RePowerEU Plan, with additional measures coming from the group’s clean tech and other green financing activities. This is expected in turn to help the Green Deal Industrial Plan unveiled by the Commission in February 2023.
The EIB and the EIF, together with the European Bank for Reconstruction and Development, will support public and private investments in net zero technologies and industrial innovation. Some examples of projects that could be included relate to battery technology, critical raw materials recycling, hydrogen, biofuels, and low-carbon steel.
By December 2022, the EIB had agreements worth €2.3 billion across nine EU countries for 29 projects under the InvestEU programme, which will provide financing for social investment and skills, in addition to projects focused on research and innovation and sustainable infrastructure.
At the release of the group’s annual results in Brussels, EIB president Werner Hoyer said: “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.”
What has the EIB Group committed to in its 2023-25 Operational Plan?
In its latest revolving three-year Group Operational Plan for the period 2023-2025, the EIB Group has provided funding targets for 2023 alongside plans for 2024 and 2025. In addition to increased levels of funding, it plans to advance additionality and impact in its financing plans across all three of its operational units.
The group has allocated a total new financing volume of €80.4 billion in 2023, rising to €82.2 billion in 2024 and to €79.7 billion in 2025. Each year it plans to exceed the 50% threshold of overall financing for climate action and environmental sustainability projects.
Planned spending for 2024 and 2025 could be revised during its annual planning cycle, to advance the group’s impact on supporting the EU’s plans for energy security as well as global competitiveness.
Most of the major economies will compete for a share of a vast global market spawned by the need for a green energy transition. Indeed, the International Energy Agency estimates that $650 billion in annual investments are needed by 2030 to fulfil the clean energy needs, which is three times the current levels of investment.
The EIB’s goal of committing €1 trillion in financing by 2030 for climate action and environmental sustainability, therefore, may be instrumental in helping the EU secure its portion of this future opportunity.