EC, EIB sign €10bn agreement to support climate-neutral economy

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By Temitope Ponle

Abuja, Sept. 7, 2022 (NAN) The European Commission and the European Investment Bank (EIB) have signed agreement on Public Sector Loan Facility, the third pillar of the Just Transition Mechanism.

This is contained in a statement on the official website of the EIB on Wednesday.

The agreement brought to 10 billion euros of EIB financing available by 2027 to spur investments.

This would help reduce the socio-economic costs of the transition and facilitate the creation of new businesses, jobs and infrastructure.

This followed the call for proposals for European Union (EU) grants component under the facility launched by the European Commission in July.

According to the statement, the Just Transition Mechanism (JTM) is a key tool to ensure that the transition toward a climate-neutral economy happens in a fair way, leaving no one behind.

It provided targeted support to help mobilise around 55 billion euros over the period of 2021 to 2027 in the most affected regions, to alleviate the socio-economic impact of the transition to a carbon-neutral economy.

The mechanism consisted of three pillars of financing: the Just Transition Fund, a dedicated just transition scheme under InvestEU and the Public Sector Loan Facility.

The EIB supports all three pillars as outlined in its orientation paper “Supporting the Just Transition Mechanism – comprehensive proposal of the EIB Group”.

The loan facility would finance public investments in the regions most affected by Europe’s transition to a climate-neutral economy and combine up to 10 billion euros in EIB loans with 1.5 billion euros in EU budget grants.

EIB Vice-President, Ricardo Félix said the transition to a net zero emissions economy entailed profound socio-economic challenges, especially for those regions that heavily depended on carbon-intensive activities.

“Big challenges require all stakeholders to combine and coordinate their efforts so that their action can be impactful.

“That’s what we do here by blending EIB and European Commission funds and by working closely with public entities in just transition regions,” he said.

Félix said that making full use of the facility would help regions transform their economies in a way that was acceptable to societies.

The Commissioner for Cohesion and Reforms, Elisa Ferreira, said the European Green Deal was a strategy to achieve a climate-neutral economy while the Cohesion Policy would help deliver green objectives in a fair way.

“Thanks to this agreement with the EIB, the Public Sector Loan Facility will offer public authorities in the regions and territories that most need support preferential lending conditions for projects that do not generate sufficient revenue to be financially viable.

“The European Commission and the EIB will keep working together to support a fair transition that will leave no one behind,” Ferreira said.

According to the statement, the agreement paves way for the territories and regions most affected by Europe’s transition to a climate-neutral economy to benefit from grants and loans under a Public Sector Loan Facility.

The facility is part of the European Green Deal’s Just Transition Mechanism, which supported a fair shift away from fossil fuels while leaving no one behind, including communities that had relied on coal mining and polluting industries.

The loan facility offered public sector entities planning investment projects in affected regions a combination of EIB loans and EU grants, effectively reducing the financial burden for public coffers.

Potential beneficiaries could also request advisory support from the InvestEU Advisory Hub to prepare and implement projects.