Banks as bridges: Investment in a sustainable and climate ... · 18/01/2013 22.01.2013 8 The EIB approach to Sustainability (2) ! Sector Lending Policies ! Energy: Prioritisation

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Matthew Arndt, Head of division

Environment, Climate and Social Office  

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

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Who we are Breakdown of the EIB’s capital

As at 1 April 2009

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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

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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

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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

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EIB Signatures 2011 (in EUR)

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The EIB approach to Sustainability (1)

!  Statement of Environmental and Social Principles and Standards (2009) http://www.eib.org/attachments/strategies/eib_statement_esps_en.pdf

!  Environmental and Social Practices Handbook http://www.eib.org/attachments/thematic/environmental_and_social_practices_handbook.pdf

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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)

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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

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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

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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

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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

Climate Lending 2009-2011 in billion EUR

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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 CO2eq or relative annual emission >20kt CO2eq; Pilot phase 2009-2011; 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)

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39

23

-9

-14

-9

-20 -10 0 10 20 30 40 50

2009

2010

2011

Relative Emissions

Absolute Emissions

EIB Portfolio Absolute & Relative Emissions 2009 – 2011 (Mt CO2e)

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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)

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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)

THANK YOU

Matthew Arndt Head of Division

Environment, Climate and Social Office

18/01/2013 18 European Investment Bank