€1 Trillion in 10 years: What the new EU Climate Finance programme offers private investors

A big promise, a big sum, and a big responsibility:

By 2050, Europe aims to be the first climate-neutral continent. How? By investing in sustainable innovations that save our world.

For this purpose, the EU has launched the One Trillion Climate Finance Plan to be mobilized in the next investment in 10 years.

But where will the money come from?

At least €650 billion should come from private investors, to whom the EU is making an incredible offer.

one trillion climate finance plan europe

EUROPEAN COMMISSION

How does the InvestEU Programme work?

Under the InvestEU Programme, which runs from 2021 to 2027, the EU is offering a budget guarantee of €38 billion to mitigate risk of investing in sustainability projects.

investeu fund for sustainable europe

EUROPEAN COMMISSION

The guarantee backs up the investment projects for financial partners (such as the European Investment Bank Group), who will be able to scale-up riskier investments, especially when it comes to innovation and SME. In addition, the partners themselves should contribute €9.5 billion in risk-bearing capacity.

Now, private investors are coming into play

The InvestEU Fund plans to achieve the goal of €650 billion in additional investment by attracting private and public investments with a multiplier effect of 13.7x. This means every public Euro mobilized through the fund will generate €13.7 of total investment, which would not have happened otherwise.

Benefits for the investors

For the investors, this means that InvestEU covers up to 50% of the project costs. Tools and benchmarks such as sustainability proofing and climate and environmental tracking will be provided to help investors assess the sustainability aspects of a project. This makes it easier to check whether an innovation is in fact sustainable and investable.

The InvestEU Portal is a one-stop-shop of investible European projects and a meeting place for promoters and investors that makes access to these investment opportunities easy.

The innovation projects

Let us take a closer look at the projects that make an interesting investment opportunity and are covered by the EU budget guarantee.

EUROPEAN COMMISSION

The one trillion climate finance plan budget guarantee splits up between the policy areas as follows:

  1. Sustainable infrastructure:                       €11.5 billion
  2. Research, innovation and digitization: €11.25 billion
  3. SMEs:                                                             €11.25 billion
  4. Social investment and skills:                   €4 billion

Projects shall fulfil the following criteria for the InvestEU Programme:

  • The InvestEU Fund will only support projects that could not obtain finance at all or not at the required terms without InvestEU Fund support.
  • It will also target higher risk projects in specific areas.
  • Besides, InvestEU projects must fulfil other eligibility criteria defined in the Financial Regulation, e.g. addressing market failures or investment gaps and be economically-viable, needing EU backing in order to get off the ground, achieving a multiplier effect and where possible crowd-in private investment.

How do you apply for InvestEU financing?

  • Project promoters should apply directly to the EIB, to national and regional promotional banks, or to the national offices of International Financial Institutions such as the EBRD or the Council of Europe Development Bank. At that stage, the financial partners submit a proposal to the Commission to apply for the EU guarantee.
  • SMEs should continue to apply to their local commercial or public banks whose financial products are covered by the EU guarantee in their country or region. The local intermediary will inform them if a particular financing programme is covered by the InvestEU Fund.

Further information

Download the InvestEU factsheet

 

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