The European Fund for Strategic Investments (EFSI) - worth EUR 20 billion, also known as the ‘Juncker Plan’, does not contribute enough in the fight against climate change, states an analysis of the EFSI investments. The analysis evaluated operations funded by the EFSI from its start in 2015 until October 2017. The analysis by CEE Bankwatch Network, CAN Europe, Counter Balance and the WWF European Policy Office shows that even though the imbalances in geographical and other sectors have become less problematic over this period, they have not been eliminated. The fund is still not reaching the right geographical and sectorial targets set by the EFSI Steering Committee in its Strategic Orientation document.
The biggest concerns remain sustainability and transparency. An initial analysis, carried out in 2016, showed that the EFSI continued to support fossil fuels in the energy sector and decreased its contribution to energy efficiency. The analysis also showed increased funding in individual transport modes, including motorways.
The analysis of signed-off operations showed that the EFSI supported almost equal volumes of fossil fuels projects and renewable energy projects (EUR 1.85 billion versus EUR 2.0 billion) in the energy sector. Fossil fuel investments were mainly located in Italy and contributed to the development of gas distribution networks, smart metering and gas storage. The two most supported forms of investments were motorways and innovations in the automotive industry. The EFSI largely neglected projects in sustainable public transport and other forms of urban mobility, receiving a minor share of 13% of the EFSI transport sector funding.
The EFSI supported only 20% of the projects that contribute to climate change mitigation and adaptation, whereas the European Investment Bank’s (EIB) standard portfolio reached the threshold of more than 25%. According to the analysis, the EFSI does less for climate change mitigation and adaptation than the EIB’s standard operations. The problem with the EFSI is in the lack of distinct, clearly identifiable and transparent functions of the instrument. In many cases, summaries of EFSI projects have not been published, and scoreboards in which the projects are assessed are not published even after a loan agreement is finalised. Moreover, the EFSI portfolio on the EIB website is not compatible with the list of investment approvals available from the Investment Committee.
The energy sector received the lion’s share of EFSI guarantees, with more than EUR 6.3 billion. However, there are concerns about whether the fund has contributed enough to achieving the EU’s long-term objectives to decarbonise the energy sector.
By the end of 2016, the EFSI had approved and signed operations worth EUR 1.8 billion for fossil fuel infrastructure projects (mostly gas), which leveraged at least EUR 5 billion in additional investment into this type of infrastructure. The latest analysis of signed-off operations shows that by the end of September 2017, the EFSI had financed almost the same amount of fossil fuels-based projects as those for renewable energy: fossil fuels received EUR 1.85 billion and renewables EUR 2 billion. Almost 60% of fossil fuel investments were located in Italy, with the rest in the U.K., Germany, Spain and Portugal.
Gas infrastructure prevailed among eleven investments, particularly new gas transmission and distribution networks and gas metering. In addition, almost two thousand kilometers of gas and oil pipelines were constructed or renewed under the category of small- and medium-sized enterprises (SMEs) and mid-cap businesses.
The EIB’s standard project supported twice as many renewables as fossil fuel projects. Only 16% (EUR 1 billion) of EFSI guarantees in the energy sector targeted energy efficiency. These projects included the construction of new ‘near-zero’ buildings and projects to modernise existing buildings. The rather limited share of investments in energy efficiency can partially be explained by the fact that some of these investments fall into other categories. Complete data on the volume of the EFSI guarantees in support of energy efficiency can be found in the EIB’s Climate Action Report which also covers energy efficiency components of projects from the remaining sectors.
The analysis also recommends the exclusion of all fossil fuel projects, including the funding of fossil fuel infrastructure projects, to ensure that the Innovation and Infrastructure Window becomes climate-proof. At least 50% of the financing should go to climate action projects; in particular energy efficiency projects.
A sound analysis of the climate impact of EFSI projects needs to take place to ensure that high-carbon projects that are detrimental to reaching EU climate objectives will not be supported. A better enhancement of the EFSI governing bodies is also needed. All operations approved by the EFSI Investment Committee need to be assessed and disclosed to the public, said the authors of the analysis.
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