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Sustainable energy : the contribution of the European Investment Bank

Sustainable energy : the contribution of the European Investment Bank. Structured Finance for Energy & Environment. Christopher Knowles. Marseille, 17th March 2009. THE EUROPEAN INVESTMENT BANK. The European Union’s financing institution ...

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Sustainable energy : the contribution of the European Investment Bank

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  1. Sustainable energy :the contribution of theEuropean Investment Bank Structured Finance for Energy & Environment Christopher Knowles Marseille, 17th March 2009

  2. THE EUROPEAN INVESTMENT BANK • The European Union’s financing institution ... • Created by the Treaty of Rome in 1958, to provide long-term finance for projects implementing the EU’s 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

  3. 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

  4. 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

  5. Renewable Energy Financing in 2008 amounted to € 2.2 bn EIB’S ENERGY FINANCING IN 2008 Renewable energy

  6. Wind Energy projects accounted for 34% of EIB’s Renewable Energy Financing in 2008 EIB’S RENEWABLE ENERGY FINANCING IN 2008 Renewable energy

  7. 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

  8. Global new-build asset financing by sector Q1 2006 – Q4 2008

  9. M&A 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.

  10. European Onshore Wind Project Debt Spreads(Basis Points Over Euribor)

  11. “Layer Cake” showing estimated annual interest cost for Euro area Onshore Wind Farm

  12. Leverage – average debt as a percentage of total project cost, Q3 2007 and Q1 2009

  13. 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 R&D • Special Facility and RSFF to ensure sustained R&D despite slowdown • Hybrid, electric, hydrogen Financial instruments / Carbon funds / Carbon Capture & Storage

  14. EU response (bn EUR extra/year) plus MS boosts of 1.5% of GDP (EUR 170bn)

  15. 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

  16. CONTACT STRUCTURED FINANCE AND ADVISORY / AGI-EU Chris Knowles, knowles@eib.org James Ranaivoson, ranaivos@eib.org Kristin Lang, k.lang@eib.org Martin Poulsen, poulsen@eib.org Melchior Karigl, karigl@eib.org Peter Coveliers, covelier@eib.org

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