Financing the green transition in Belgium in the context of the economic recovery

Online Seminar – 25 September 2020

Pierre-Emmanuel Noël

Representative for EIB Operations in Belgium

European Investment Bank Group 1

Part II - The role of the European Investment Bank

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What is EIB?

EIB is the EU's Projects Bank owned by the EU's member states – it is a not-for-profit institution

Most of the money comes from issuing "AAA" bonds (some of them "green") on the capital

markets.

Final beneficiaries: public sector entities, companies, charities, ...

EIB finances projects in line with EU's Strategic

Objectives – prominently, Climate & Transition

Some EIB activities are underpinned by EU Budgetary resources : InvestEU,

Recovery Fund, ...

European Investment Bank Group 4

Three things to remember about EIB

EIB is the Climate Bank

EIB is becoming the EU's Climate Bank, a key component of the EU's Green Deal

EIB is also the Innovation Bank

EIB is more than a lender

EIB finances innovative Belgian corporates, e.g. biotech (Biocartis,

Univercells), batteries (Umicore)

EIB has granted an EUR 3.5m ELENA subsidy to Wallonia to support a massive EE investment plan and advises

various public bodies (eg on PPP Plan Lumière)

Belgium's performance as seen by the EC (European Semester, 2/2020)

"Belgium’s intermediate and longer-term climate commitments will require political decisiveness to work out

concrete measures and benefit from the opportunities in terms of economic growth, job creation and health benefits.

The inter-federal energy pact of December 2017 contains a number of preparatory elements for the integrated

National Energy and Climate Plan, adopted in late 2019.

In this plan, Belgium reconfirms its commitment to implementing the Paris agreement and evolve towards a carbon-

free society. This transition relies heavily on investments in all GHG emitting sectors, including the share of

renewable energy in the energy mix, in a context of nuclear phase-out.

Crucial in its success will be the transformation of energy-intensive industries, such as the petro-chemical pole

around Antwerp and steel around Liège and Ghent, decarbonisation of road transport through electrification and

modal switch, and accelerating renovation rates in what is one of the oldest building stocks in Europe. (...) (In)

circular economy, (...) Belgium is doing well despite insufficient efforts in promoting eco-innovation. A stable,

predictable and coordinated legislative framework will be essential to mobilise the required private sector

investments."

EU average (2017) : 78.3

The BCG Report commissioned by FEB/VBO (2019)

The x axis of the abatement curveshows the total GHG abatement

potential of each lever in 2030. Thewidest blocks offer the greatest

abatement potential. Potential shownis incremental to the embedded case.The y axis illustrates the societal cost

of executing each lever in terms ofeuro per ton of GHG mitigated. Thus,

the levers with the greatest area havethe greatest absolute costs.

In terms of the societal business case,the left-most levers of the curve are

the most interesting, especially thosewith negative cost (positive business

case).

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Ensuring transition in Belgium – One objective, many layers

UN/Paris Agreement (COP 21)

Belgium's National Energy and Climate Plan (2019)

Municipalities, public agencies

EU's Climate Objectives and Green Deal

Belgian Region's respective "Climate Plans"

Companies, households

European Investment Bank Group 9

Financing transition in Belgium: enabling low-carbon projects

Renewable energy

Large projects (offshore wind)Smaller projects (PV, onshore wind, biomass)

Energy efficiency

Low-carbon technology

Public buildings, industry, homes

Batteries, smart grids, new technologies

Feed-in tariffs, stable policy framework, easy permitting, ...

Clean transport

Collective transport, Low-carbon busses

Tax incentives & subsidies, political momentum, policy framework, debt

accounting, ...

Political momentum, institutional and policy framework, technology

and industry readiness, ...

Political momentum, institutional and policy framework, economic

incentives (market kick-start)

European Investment Bank Group 11

Belgium : a fragmented institutional landscape

Federal governmentNational Rail Network Operator (Infrabel), Offshore windfarms

Transition features in the "PNIS" (National Strategic Plan)

Walloon Region

Inland waterways, water, wastewater, waste management & environment, urban transport (together with municipalities). Important role of the "Intercommunales"

(sub-regional public entities with broad remits – e.g. water and energy distribution grids) – NB: schools are with the "French Community"

Brussels Region Metro (through public company STIB), regional roads & tunnels, urban regeneration (through dedicated agencies), hospitals

Flemish RegionWater, wastewater, waste management & environment, urban transport

(together with municipalities), energy distribution grids, EE social housing

The example of Belgian offshore wind – an EIB success story

Challenges ...

Finding the projects ticking all the boxes and having the right scale – apart fromoffshore, most RE projects are sub-scale for a direct loan

But EIB may use financial intermediaries – eg "Smart Cities" envelopes withBelfius

Latest trend: increasing cooperation with National Promotional Institutions(NPIs) : SRIW, PMV, Finance.Brussels, ... – contrary to other EU countries,Belgium doesn't have dedicated "[green] infra finance" institutions

Compliance with Paris Agreement, EU/EC objectives and EIB's Energy Lending Policy(e.g. no more gas projects)

May result in interesting projects not being eligible – e.g. renewable energycommunity with central heating using cogeneration

Beware of excessive bureaucracy/technocracy/reporting burden

... continued

Public deficit/debt constraints inhibiting investment – e.g. energyperformance contracts (Eurostat consolidation issue), Tram de Liège

Institutional fragmentation and policy discrepancies

Needed: consistent, forward-looking strategic "infrastructure andtransition" plan(s) to help entrepreneurs and investors understandthe direction of travel

This is also what the EU is requesting in the context of therecovery package!

Presentation of the findings of the Febelfinresearch

Part III – Panel Discussion: the role of the National Promotional Institutions

European Investment Bank Group 17

EIB and Belgian National Promotional Institutions –Building a new ecosystem to finance transition in Belgium

Federal government

Walloon Region

Brussels Region

Flemish Region

Panel - Questions aux "NPIs"

Quel est le rôle des sociétés belges d'investissement pour mettre en oeuvreles recommandations de la CE ?

Voyez-vous une évolution vers une nouvelle (ou plus grande) composante"infrastructures vertes" dans vos mandats ?

Quel est le rôle des investissements verts / durables dans la relance économique ?

Que recommanderiez-vous pour le "plan national de relance et de résilience" (quidoit tenir compte des recommandations du semestre européen) ?

Existe-t-il une concertation entre les sociétés publiques d'investissement entre elleset avec les stakeholders concernés par le financement de la transition vers uneéconomie plus durable (ONG environnementales, entreprises, syndicats, etc.) ?

La taxonomie verte de l'UE est-elle utile pour les sociétés d'investissement et si oui,comment ?

European Investment Bank Group

Contact:

Pierre-Emmanuel Noel

EIB Representative in Belgium

noelpe@eib.org

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This Presentation is incomplete without reference to, and should be viewedsolely in conjunction with, the oral briefing provided by the EuropeanInvestment Bank (“EIB”). The terms and conditions are intended as an outlinefor discussion purposes only and made on an indicative basis. All figures setforth in this Presentation are subject to change, to a satisfactory due diligenceand to all necessary internal approvals of EIB (in particular of its creditcommittees). The information in this Presentation reflects the prevailingconditions and the view of EIB as of this date and are accordingly subject tochange and based on carefully selected sources believed to be reliable. EIB hasnot independently verified this information and does not make anyrepresentation or will be liable that such information is accurate, valid, timelyand complete. This Presentation is provided without any liability whatsoeverby EIB and shall not constitute any obligation of EIB to extend credit facilitiesto the Company or to carry out a due diligence review of the aspects relevantfor the financing of the Project. Neither this presentation nor any of itscontents may be duplicated, published or used for any other purposes withoutthe prior written consent of EIB.