Banks as bridges: Investment in a sustainable and climate-friendly economic system

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1 Banks as bridges: Investment in a sustainable and climate-friendly economic system Matthew Arndt, Head of division Environment, Climate and Social Office 18/01/2013 1

2 Who we are Breakdown of the EIB s capital As at 1 April /01/2013 2

3 EU policy context! 2008: EU adopted climate action targets by 2020:! Reduce GHG emissions by 20% (30% if new international agreement)! Ensure 20% of overall energy consumption from RE sources! Increase EE to save 20% of energy consumption! 2009 EC Adaptation White Paper published! Building knowledge base, climate proof key EU policies, financing instruments, supporting non-eu countries! 2010: Europe 2020 Strategy for smart, sustainable and inclusive growth! 7 flagship initiatives: e.g. Resource Efficiency! 2011: Commission Communication - Roadmap for moving to a competitive low carbon economy in 2050! EU emissions must be reduced by 80-95% from 1990 by 2050, and global emissions halved! 2011: Commission Communications Flagship Initiative and Roadmap for a resource-efficient Europe! Climate change framed in the resource efficiency context! 2013: Comprehensive EU Adaptation Strategy to be released 18/01/2013 3

4 The European Investment Bank (EIB) European priority objectives! Within the EU:! Growth and Employment! Environmental Sustainability! Economic and Social Cohesion! Climate Change Mitigation and Adaptation 18/01/2013 4

5 The European Investment Bank (EIB) European priority objectives! Outside the EU:! Local private sector development, in particular support to SMEs! Social and economic infrastructure development! Climate Change Mitigation and Adaptation 18/01/2013 5

6 EIB Signatures 2011 (in EUR) 18/01/2013 6

7 The EIB approach to Sustainability (1)! Statement of Environmental and Social Principles and Standards (2009) Environmental and Social Practices Handbook 18/01/

8 The EIB approach to Sustainability (2)! Sector Lending Policies! Energy: Prioritisation of renewable energy, energy efficiency, penalisation of fossil fuel in economic analysis (Energy lending policy was submitted to Public Consultation in 2012 and will be revised this year)! Water: Water use efficiency (networks, buildings, production processes), improved watershed quality/quantity management! Transport: Affordable, environmentally friendly and safe => avoid-shift-improve! Solid Waste: Waste hierarchy: Reduce-reuse-recycle-recover! Cross-sector approach (Climate, Resource efficiency, Environmental and Social safeguards) 18/01/

9 Resource efficiency definition (1) The EU Roadmap s categorisation of resources! Fossil fuels! Materials and minerals! Land! Soils! Water! Air! Ecosystems, Biodiversity! Marine resources! Waste 18/01/

10 Resource efficiency definition (2) Resource Efficiency activities may refer to the:! Avoidance of resource use (e.g. change in consumption patterns, demand management, renewable energy, reuse, recycling, recovery, rural/urban planning)! Reduction of the quantity of the resource extracted or used for a given output, referred to as resource productivity (e.g energy/water efficiency.)! Avoidance of negative impacts of resource extraction/use on the quality of the same resource stock (e.g. on soil or water quality) or on other natural resources (pollution abatement, waste, erosion) or the quantity (and price) of alternative outputs (different forms of land use)! Restoration of natural resources (e.g. new sustainable land use and forestry, soil remediation, river restoration)! or a combination of these 18/01/

11 Mainstreaming Climate Action: 3 levels PORTFOLIO LEVEL COP objective, defining climate action projects SECTOR LEVEL Sector policies PROJECT LEVEL Carbon footprint, Economic price of carbon, Mandating use of BATs CROSS-CUTTING ISSUES Screening for and managing project climate risks (Adaptation) Identify energy efficiency opportunities Awareness raising 18/01/

12 Portfolio level: Definitions of Climate Action projects! Overall target of 25% of signatures for Climate Action! Definitions applied since 2009 cover following sectors/ project types:! Energy Efficiency! Renewable Energy! Nuclear Energy! Sustainable Transport! Forestry and Land Use! RDI! Adaptation! GHG capture or avoidance other than CO2 (e.g. methane)! Harmonisation of definitions among MDBs (result presented at Doha); ongoing harmonisation with BFIs 18/01/

13 Climate Lending in billion EUR 18/01/

14 Project level Carbon footprint (Absolute and relative to baseline, all direct loans for projects or fully appraised framework loan allocations with absolute annual emissions >100kt CO 2 eq or relative annual emission >20kt CO 2 eq; Pilot phase ; since 2012 mainstreamed into appraisal work Economic price of carbon Climate vulnerability assessment, managing project s climate risks (Adaptation) Identify energy efficiency opportunities (energy audits) 18/01/

15 EIB Portfolio Absolute & Relative Emissions (Mt CO2e) Relative Emissions Absolute Emissions /01/

16 Banks can serve as bridges, but in order to cross the bridge! Enabling Environment:! Transparency and stability over time (of rules and their implementation)! Lean and straight-forward procedures for awarding licenses and permits! Elimination or reduction of harmful subsidies (e.g. for fossil fuels) 18/01/

17 The way forward! Drafting of New Energy Lending Policy following Public Consultation! Climate Action Review 2013! Capital Increase of EUR 10bn which will allow for additional lending of EUR 60bn in the areas of! Innovation and skills! Access to finance for SMEs and mid-cap companies! Resource efficiency! Strategic infrastructure (broadband, inter-modal transport connectivity, smart grids) 18/01/

18 THANK YOU Matthew Arndt Head of Division Environment, Climate and Social Office 18/01/2013 European Investment Bank 18