4 Types of EIB Green Finance
This part of the chapter examines how the EIB system works as regards green ship
finance. The EIB has had a generally creditable record of providing financial support
to the transport sector in the EU. Indeed, the EIB proudly states that in 2017 there
had been 735 million additional passengers carried on EIB-financed transport. Not
all such transport projects of course were supported as green finance. In order to
understand better the prudential approach taken by the EIB to financial support, it is
useful to examine, at least in brief, the different forms of financing offered
17 :
Lending
Project loans to finance a transport project or programme with a total investment cost
in excess of EUR 25 million. The EIB does not however cover more than 50% of the
total project cost.
18
Intermediated loans are offered by the EIB to local banks and other intermediate
undertakings which then lend or pass the amounts on to the end beneficiaries.
19 That
works well especially when the end beneficiaries do not have the best creditworthiness to acquire financing for themselves.
Framework loans allow the EIB to finance transport schemes with a total investment cost of less than EUR 25 million by combining several projects under one
loan.
20
Infrastructure equity funds enable the EIB and partners to incentivise investors to
invest, usually in capital intensive investments.
21
17 Information is derived from the EIB website http://www.eib.org/en/projects/sectors/transport/
index.htm.
18 See for example the development of the Dublin port which secured EUR 100 million from the EIB
in 2015 to deepen the navigation channel to allow for bigger container and cruise ships. The project
was estimated to cost EUR 230 million—as can thus be seen, the EIB’s contribution there is less
than 50%.
19 In 2015 the EIB provided financing to intermediaries in France who provided financial assistance
to home owners to retrofit their homes to meet better environmental standards. The total being
financed was approximately EUR 400 million.
20 The EIB for instance provided EUR 85m—the initial tranche of a EUR 200m loan to cover 50%
of Metro de Madrid’s investments until 2019 to upgrade and modernise its infrastructure. Source:
EU
Monitor
(https://www.eumonitor.nl/9353000/1/j9vvik7m1c3gyxp/vkp8g3e84xls?
ctx¼vg9pk3qd26zl).
21 In 2015, the EIB invested in a fund, the Copenhagen Infrastructure II, which targets investments
primarily in newly established (greenfield) energy-related projects mainly in Northern and Western
Europe. The EIB’s involvement and the European Fund for Strategic Investment (EFSI) guarantee
are intended to help attract private investors and other international financiers to participate in the
fund. The fund has a target size close to EUR 2bn. (https://ec.europa.eu/commission/sites/betapolitical/files/examples-efsi-financed-projects-overview_en.pdf).
138
J. Chuah
This part of the chapter examines how the EIB system works as regards green ship
finance. The EIB has had a generally creditable record of providing financial support
to the transport sector in the EU. Indeed, the EIB proudly states that in 2017 there
had been 735 million additional passengers carried on EIB-financed transport. Not
all such transport projects of course were supported as green finance. In order to
understand better the prudential approach taken by the EIB to financial support, it is
useful to examine, at least in brief, the different forms of financing offered
17 :
Lending
Project loans to finance a transport project or programme with a total investment cost
in excess of EUR 25 million. The EIB does not however cover more than 50% of the
total project cost.
18
Intermediated loans are offered by the EIB to local banks and other intermediate
undertakings which then lend or pass the amounts on to the end beneficiaries.
19 That
works well especially when the end beneficiaries do not have the best creditworthiness to acquire financing for themselves.
Framework loans allow the EIB to finance transport schemes with a total investment cost of less than EUR 25 million by combining several projects under one
loan.
20
Infrastructure equity funds enable the EIB and partners to incentivise investors to
invest, usually in capital intensive investments.
21
17 Information is derived from the EIB website http://www.eib.org/en/projects/sectors/transport/
index.htm.
18 See for example the development of the Dublin port which secured EUR 100 million from the EIB
in 2015 to deepen the navigation channel to allow for bigger container and cruise ships. The project
was estimated to cost EUR 230 million—as can thus be seen, the EIB’s contribution there is less
than 50%.
19 In 2015 the EIB provided financing to intermediaries in France who provided financial assistance
to home owners to retrofit their homes to meet better environmental standards. The total being
financed was approximately EUR 400 million.
20 The EIB for instance provided EUR 85m—the initial tranche of a EUR 200m loan to cover 50%
of Metro de Madrid’s investments until 2019 to upgrade and modernise its infrastructure. Source:
EU
Monitor
(https://www.eumonitor.nl/9353000/1/j9vvik7m1c3gyxp/vkp8g3e84xls?
ctx¼vg9pk3qd26zl).
21 In 2015, the EIB invested in a fund, the Copenhagen Infrastructure II, which targets investments
primarily in newly established (greenfield) energy-related projects mainly in Northern and Western
Europe. The EIB’s involvement and the European Fund for Strategic Investment (EFSI) guarantee
are intended to help attract private investors and other international financiers to participate in the
fund. The fund has a target size close to EUR 2bn. (https://ec.europa.eu/commission/sites/betapolitical/files/examples-efsi-financed-projects-overview_en.pdf).
138
J. Chuah