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15th Feb 2019

MEPs want Juncker fund to focus on energy saving projects

  • MEPs in the industry and energy committee want at least €5 billion of EU guarantees to go into energy efficiency projects (Photo: arbyreed)

The European Parliament wants almost a quarter of the new EU investment fund to go to energy saving projects.

MEPs in the assembly's industry and energy committee voted on Tuesday (14 April) to call for at least €5 billion of the €16 billion guarantee provided by the EU budget to go into energy efficiency projects.

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The EU (€16 billion) and the EU's investment bank (€5 billion) will guarantee €21 billion for the so-called Juncker fund – the commission’s flagship growth project – which is then expected to be leverage to €315bn via private investors.

If parliament has its way, €75 billion will be spent on energy savings projects, “notably to support projects promoted by cities and local governments”, the adopted text said.

However, Jyrki Katainen, the commissioner in charge of selling the idea of the fund to investors, recently said the commission was not planning to dedicate a share of the fund for specific purposes.

The European Investment Bank (EIB), which borrows money from capital markets to use as loans, is also sceptical.

“I would think that it is desirable to provide as much flexibility as possible”, the bank’s vice-president Jonathan Taylor told journalists Monday (13 April). He said he feared earmarking could lead to funds being unused if demand and supply are mismatched.

Climate target

Taylor pointed out that since the investment fund, also known under its acronym EFSI, will fall under the EIB, the bank's minimum target of 25 percent for climate projects will indirectly apply.

“Let's suppose, as a thought experiment, that for some reason none of the projects under EFSI qualify as climate action. In that case, that would mean that we would have to boost the proportion of projects which count as climate action under our non-EFSI lending by that amount in order to ensure that we still hit our 25 percent target. If we do less under the one, we do more under the other.”

Taylor also countered the criticism in some quarters that the investment fund will be used to invest in coal-fired power plants – countries like Croatia, Poland, and Romania have already indicated that they want money for such projects.

He noted that the EIB in 2013 adopted lending criteria for energy projects, including a carbon dioxide emission threshold for power plants.

“In practice that means that since the standard was set, we have not lent … to coal and lignite projects, unless there is full mitigation of the emissions”, said Taylor,

“The exceptions are in the case of isolated islands where there is absolutely no possibility of anything else. We've done that once. It was a Greek island, which was not connected to the rest of the grid.”

Nuclear power

Taylor also said the bank would not be swayed by political opposition – strong in Germany and Austria – to use the Juncker fund for nuclear power projects.

“We have funded nuclear projects in the past. Should there be proposals to fund nuclear projects in the future, then we will consider them on the basis of their own merits”, said Taylor.

MEPs in the budget and economic affairs committees will debate the Juncker fund next Monday (20 April) while the whole fund is expected to be fully up and running in autumn.

Ministers clash over Juncker fund

Germany’s finance minister warned that his government would not make extra contributions to the EU’s planned €300 billion investment vehicle, as ministers clashed on how the programme should be set up.

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