€24bn Opened to Circular Economy Businesses in EU
The European Commission and the European Investment Bank (EIB) are to make some €24 billion of existing funds available to circular economy businesses.
The changes to EU financial tools that to make this possible were announced by Karmenu Vella, European Commissioner for Environment, Maritime Affairs and Fisheries at the 'Innovative Enterprise - Financing the Circular Economy', in Luxembourg this morning.
Specifically, an amendment to the InnovFin Delegation Agreement signed at the conference is expected to enable higher-risk, yet innovative sustainable business models and plans to access credit through InnovFin.
InnovFin is an EU finance support programme under Horizon 2020 which was previously only available to innovative industrial and technology enterprises.
The EIB explained that its InnovFin Advisory a financial advice service will also now support mid-sized businesses in making their circular economy projects investment ready in order to benefit from the Mid Cap InnovFin financial products.
The bank added that the changes build on the EU’s Circular Economy Strategy launched last week and result from EIB recommendations published today at the Financing the Circular Economy conference hosted under Luxembourg’s Presidency of the EU.
As part of an InnovFin advisory mandate for the European Commission and the Government of Luxembourg, the EIB said that it analysed the role of finance in the transition to a Circular Economy
The associated report Assessment of access-to-finance conditions for projects supporting circular economy presents practical actions to finance the re-use, repair, refurbishing and recycling of existing materials and products.
In addition to broadening InnovFin's eligibility criteria to attract circular economy projects, the report proposed setting up a platform for institutional and private investors ready to support projects and encourage new funding applications.
Other non-finance related recommendations concerned relations between manufacturers and their industry peers, as well as consumers.
The report made further recommendations on how consumers can receive more information on the expected lifetime of products or availability of spare parts, and how to assist enterprises in the creation of sound secondary markets and sharing platforms for manufactured goods or by-products.
“Today's event is not only about the package, but it is more about making real changes on the ground. As we emphasised in the package, a transition to a circular economy will definitely need a kick start - just like any large-scale change,” explained Vella. “It will bring about economic advantages as well as financial opportunities. Which is the reason why, the EU’s financial sector will play a key role in moving us towards a circular future.”
“Using natural resources in a smarter way is simple economics. Europe cannot compete on lower wage costs,” he continued. “Unfortunately, we do not have the same natural resources as other parts of the world. Our future will revolve around providing products that are used and re-used, and which do not deplete the Earth's natural resources.”
"This Commission has made the transition to a more circular economy a priority of our work. And for small and medium businesses across Europe, we are committed to making that transition as easy as possible,” added Vella.
“Now one week after we launched our proposal, we have a real financial commitment. Today's signing of an extension of funding coverage with the EIB will help our risk-takers make that leap to a more sustainable model of production,” he concluded.
Carlos Moedas, European Commissioner for Research, Innovation and Science, commented: "The circular economy has great potential to create a competitive advantage for Europe on a sustainable basis. I'm delighted to see that InnovFin, supported by Horizon 2020, has been improved to allow, from now on, support to circular economy projects."
Werner Hoyer, President of the EIB added: “We must enable the transition towards a circular economy to unlock sustainable growth without consuming more resources, or consuming them in a smarter way - our collective future and prosperity depend on that. We at the EIB, the EU Bank, will continue to deploy technical expertise, advisory and financial firepower in support of those investment decisions which make our economies more circular, more sustainable.”