The European Fund for Strategic Investments was established in 2015 to power-charge post-crisis Europe and provide a much-needed impulse for de-carbonising its economies.
Yet, during its first year, the fund leveraged EUR 1.5 billion for fossil fuel infrastructure, and 68% of transport investment is destined for carbon-intensive projects.
In addition, the fund’s portfolio is heavily biased towards old EU member states and rather seems to replace the European Investment Bank’s green investments, rather than complementing them.
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While the large amount of support for renewable energy and energy efficiency (over EUR 1.7 billion each) is welcome, still 15 per cent of all EFSI energy sector investments went to fossil fuels.
These operations were approved without being scrutinised in terms of their compliance with the EU 2030 and 2050 climate and energy frameworks. This is of particular concern, as the EFSI regulation explicitly requires alignment with the EU’s long-term climate goals.
Around 90 per cent of fossil fuel funding was related to gas infrastructure. These investments target especially Italy, Spain and Germany, at a time when those countries have repeatedly made commitments to phase out fossil fuel subsidies.
Not only the EFSI support for fossil fuels is problematic. On closer inspection also the relatively large funding for renewables and energy efficiency is less a sign of success than the European Commission and the European Investment Bank would like.
Since the creation of the EFSI, the EIB has not financed the energy sector with its existing portfolio to the same extent that it had in the past. This coincides with the high concentration of EFSI investments there. It suggests that to some extent EFSI support may have replaced standard EIB energy lending instead of complementing it.
In 2015 and 2016, the share of renewable energy in the EIB’s standard portfolio decreased considerably compared to the years between 2007 and 2014.
The picture looks very different if EFSI guaranteed operations are included. Both the overall and the energy portfolios then have high shares of renewable energy financing.
This confirms that the EIB’s standard energy lending did not support renewable energy in 2015–2016 to the same extent that it did in the past.
Since the EFSI is required to contribute to the EIB’s cohesion objective and complement support from the European Structural and Investment Funds (a part of the EU Budget), it is puzzling that the 13 newest EU Member States – where most territories are less-developed regions – attracted only 12 per cent of EFSI guarantees so far.
A geographical concentration is also visible in the energy sector, with the United Kingdom receiving a significantly larger share than other countries, both for renewables ...
... and energy efficiency. Only three countries benefitted from the more than EUR 1.7 billion for energy efficiency operations in the energy sector.
The EFSI support in the transport sector is with more than two thirds concentrated on high carbon transport modes, namely roads and airports.
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Image credits (in order of appearance):
Dean Hochman (CC BY 2.0)
Harold Wright (CC BY-NC-ND 2.0)
Richard Fraser (CC BY-NC-ND 2.0)
Charles Clegg (CC BY-SA 2.0)
Ken Ohyama (CC BY-SA 2.0)