One and a half years after the launch of the European Fund for Strategic Investment (EFSI) – a three years initiative promoted by the Juncker Commission and managed by the European Investment Bank to boost new investments in Europe worth EUR 315 billion – both institutions are eager to celebrate the successes and to highlight investments facilitated through the fund and a few selected showcase projects.
In relation to the announcements that a large share of the EU’s financial resources is to be climate-related, the EFSI is supposed to mobilise additional investments with climate and resource efficiency objectives, which constitutes a unique opportunity to foster the much-needed transformation of the EU’s energy systems.
What is European Fund for Strategic Investment (EFSI)?
The European Fund for Strategic Investments, launched jointly by the EIB Group - European Investment Bank and European Investment Fund - and the European Commission, is part of an initiative to help mobilizing private investments. This “Investment Plan for Europe” aims at improving the investment environment, at making sure investments reach the real economy (e.g. via the creation of the European Investment Project Portal and by increasing assistance to project promoters through the European Investment Advisory Hub) and to trigger additional investment of at least EUR 315 billion over a three year period (2015-2017). The EUR 315 billion investment target is supposed to be accomplished by financing provided by the EIB to projects carried out by private or public investors and based on a guarantee of EUR 16 billion from the EU budget, complemented by a EUR 5 billion allocation of the EIB’s own capital. The EIB should provide funding for those economically viable projects which have a higher risk profile than ordinary EIB activities. It will focus on various sectors, including:
• Digital, transport and energy infrastructure
• Education, research, development and innovation
• Expansion of renewable energy and resource efficiency
• Support for smaller businesses and midcap companies
However a joint study by Bankwatch, CAN Europe, WWF, Counter Balance and Friends of the Earth Europe assessing in detail how much the EFSI has so far contributed to the EU’s climate agenda, comes to less optimistic conclusions:
The EFSI portfolio shows a clear effort in encouraging renewables and energy efficiency projects. Whereas the share of energy efficiency and renewable energy investments in the EFSI is relatively high (around 30%), all energy efficiency investments happen in just three countries, the UK, France and Finland; and more than 50% of all investments into renewable energy take place in two countries only, the UK and Belgium.
And yet a concerning portion of the investments still supports fossil fuel projects.
A 15 per cent of the EFSI energy sector support was related to gas infrastructure, mostly transmission and distribution adding up to EUR 1.5 billion investments into fossil fuel infrastructure. These operations were approved without being scrutinized on the merit of their compliance with the EU 2030 and 2050 climate and energy frameworks. This is of particular concern as the EFSI regulation already explicitly requires alignment with EU’s long-term climate goals.
The EFSI legislation is currently being reviewed, aiming at prolonging its lifetime until 2020. As a flagship initiative of the European Union, the EFSI should set a positive trend and clear fossil fuel projects off its agenda altogether. Instead, the EFSI should catalyse the transition away from fossil fuels and towards 100% renewables and fully energy efficient economies.