Introducing the Natural Capital Financing Facility. Interactive Webinar Tuesday 15 September CET

Transcription

1 Introducing the Natural Capital Financing Facility Interactive Webinar Tuesday 15 September CET

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3 Q&A From your computer, please ask us questions (at any time during the presentations) At the end of each session, as many questions as possible will be answered

4 Ask a question 1. Click on 2. Enter your name 3. Enter 4. Enter the subject 5. Enter your question 6. Indicate your location 7. Click Ask question 8. Click Close to exit

5 Introducing the speakers Anne Theo Seinen, European Commission Maddalena Dali, European Commission Katarina Malmnäs, European Investment Bank Moderator: Matt Rayment, ICF International

6 What is the NCFF and why was it set up? Maddalena Dali, European Commission

7 LIFE: why financial instruments? Make optimal use of scarce public funds, "crowd in" private finance Address market gaps and barriers: demonstrate the business case for higher-risk projects invest in projects that may not be considered commercially viable today but have the potential to be so in the future facilitate market uptake of climate and environment friendly actions and greening of financial intermediaries Complement traditional action grants

8 NCFF objectives Address market gaps and barriers for revenue-generating or cost-saving projects promoting the conservation of natural capital to meet biodiversity/adaptation objectives Test different financing options; identify most suitable approaches Three more specific objectives: Establish a pipeline of replicable, bankable Operations, serving as a 'proof of concept' Demonstrate to private investors the attractiveness of natural capital projects; develop a sustainable flow of private capital and achieve scale Leverage funding from private investors for this pipeline through the use of EU Funds

9 NCFF set up (I) NCFF launched 16 February 2015 EIB executes the Facility million Investment facility during operations, typically between 5 and 15 million: Direct loans to individual, large projects Indirect loans through financial intermediaries aimed at smaller projects Indirect investment aimed at smaller projects via equity funds Target term: 10 yr with possibility of grace period of 3yr Maximum NCFF contribution to total project costs: 75% Maximum NCFF participation per private equity fund : 33%

10 NCFF set up (II) EU contribution to the EIB of 60 million: 50 million for guaranteeing investments 10 million for the Support Facility. Budget comes from the LIFE programme, which is the EU s funding instrument for the environment and climate action. Aim at balanced geographic and thematic spread: Total support in any MS maximised at 20% of EU guarantee Support for direct operations in any MS maximised at 15% Support for intermediated operations in any MS maximised at 15% Support for individual categories maximised at 35%

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12 NCFF Support Facility 10 million Support Facility financed from the LIFE Programme For contracting experts (under a Framework Contract), the EIB will publish a call for tender in the Official Journal of the European Union for Operations expected to be supported by the NCFF maximum contribution per (potential) operation: 1 million support consists in external advice and consultancy services contracted by the EIB through a framework contract

13 Which projects can be financed by the NCFF? Katarina Malmnäs, European Investment Bank

14 NCFF will finance 4 types of projects: 1. Payments for ecosystem services 2. Green infrastructure projects 3. Pro-biodiversity and pro-adaptation businesses 4. Projects involving biodiversity offsets Address barriers to mainstream commercial financing, e.g. because they are innovative, uncertain, test and demonstrate financing models

15 Payments for ecosystem services Typical challenge: develop payment mechanisms for what is usually seen as a public good Example: WWF project Lombok Island, Indonesia

16 Green infrastructure projects Definition: Strategic investment in high quality natural and semi-natural areas designed and managed to deliver a wide range of ecosystem services Example: Urban regeneration of housing estate Augustenborg, Malmö, Sweden

17 Pro-biodiversity and proadaptation businesses Businesses providing goods and services that contribute to conservation of ecosystems and their services, including through conservation management, sustainable forestry/ agriculture/ aquaculture or ecotourism. Possible examples: ecotourism businesses Extracting biomass or aggregates as part of responsible conservation and site management

18 Projects involving biodiversity offsets Conservation activities providing measurable benefits designed to compensate for unavoidable damage to biodiversity arising from development or other activities, ensuring no net loss of biodiversity Example: Mitigation bank wetlands and streams in USA Possible concerns: fear of 'perverse effects': they should not indirectly encourage damage to nature! Context: must follow the mitigation hierarchy: avoidance, minimisation, rehabilitation/restoration, offset/compensation

19 Conclusions NCFF can fund a wide range of natural capital projects through the 4 categories (overlap between the different categories possible) Research demonstrates that there is much interest in the NCFF and a strong potential pipeline However a significant challenge is to develop potentially bankable projects capable of repaying an investment

20 Questions and Answers To your keyboards!

21 Eligibility and selection criteria Anne Theo Seinen, European Commission

22 NCFF eligibility criteria (I) Projects must: Promote one or both of the following objectives: conservation, restoration, management and enhancement of ecosystems, including through ecosystem-based solutions application of ecosystem-based approaches that enable businesses and communities to address identified risks associated with current and projected impacts of climate change, including through urban, rural, and coastal green infrastructure projects. Demonstrate financial and economic benefits, including the ability to generate revenues or save costs, with overall benefits exceeding costs Contribute to the objectives of the EU LIFE programme for nature and biodiversity, and/or climate adaptation Meet the standard criteria set by the EIB for its investments

23 NCFF eligibility criteria (II) The recipients of the NCFF must be legal entities registered in the EU Promoters might be: public bodies national public authorities (central, regional or local), or various bodies under their control, private commercial organisations, and private non-commercial organisations (including NGOs); Quality of the Counterparts: Capacity, Experience, Allocated resources Operating structure: Governance, Co-investors, Transparency, Reporting Business Context: Clear regulatory environment, Existence of market for project s bankability, Sound and efficient business model

24 Objectives of the LIFE Regulation Projects to respond as good as possible both to Nature/biodiversity and climate adaptation objectives Aim is to have high quality projects. Many Criteria and aspects, but altogether the scope for projects remains very broad

25 Art. 11 of the LIFE Regulation Specific objectives for Nature and Biodiversity refer to: EU Biodiversity Strategy to 2020 Habitats and Birds Directives, including the Natura 2000 network

26 LIFE Nature and Biodiversity (I) Checks: are the targeted species and habitats listed in the annex I to the Birds Directive or annex I or II to the Habitats Directive? (Exceptions for Annex IV species are possible) other species/habitats relevant under biodiversity considerations?

27 LIFE Nature and Biodiversity (II) how does the project contribute to "halting the loss of biodiversity and the degradation of ecosystem services in the EU by 2020 and restoring them in so far as feasible, while stepping up the EU contribution to averting global biodiversity loss"? Six targets: 1. Fully implement EU nature legislation 2. Better protect and restore ecosystems and their services, and greater use of green infrastructure 3. More sustainable agriculture and forestry 4. Better management of EU fish stocks and more sustainable fisheries 5. Tighter controls on Invasive Alien Species 6. A greater EU contribution to averting global biodiversity loss

28 LIFE Nature and Biodiversity (III) share of concrete conservation actions, i.e. actions that directly improve/slow/halt/reverse the decline of the conservation status / ecological condition of the species, habitats, ecosystems or ecosystem services targeted.

29 LIFE Climate Change Adaptation (I) Adaptation means: anticipating the adverse effects of climate change taking appropriate action to prevent or minimise the damage these adverse effects can cause, taking advantage of opportunities that may arise.

30 LIFE Climate Change Adaptation (II) Art. 15 of the LIFE Regulation: - development and implementation of Union policy on climate change adaptation, ( ) developing, testing and demonstrating policy or management approaches, best practices and solutions for climate change adaptation, including, where appropriate, ecosystem-based approaches; - improve the knowledge base, integrated approaches - development and demonstration of innovative climate change adaptation technologies, systems, methods and instruments that are suitable for being replicated, transferred or mainstreamed

31 LIFE Climate Change Adaptation (III) Contribute to a more climate-resilient Europe: enhance preparedness and capacity to respond to the impacts of climate change at local, regional, national and EU levels develop a coherent approach improve coordination Priority to projects that address key cross-sectoral, trans-regional and/or cross-border issues. Encourage: projects with demonstration and transferability potential ecosystem-based approaches to adaptation innovative adaptation technologies

32 LIFE Climate Change Adaptation (IV) Promote adaptation in vulnerable areas: cross-border management of floods trans-boundary coastal management, with emphasis on densely populated deltas and coastal cities mainstreaming adaptation into urban land use planning, building layouts and natural resources management mountain and island areas, with emphasis on sustainable and resilient agriculture, forestry and tourism sustainable management of water combating desertification and forest fires in drought-prone areas

33 Other aspects (I) no double funding, but NCFF could be complementary to other instruments E.g. synergies with integrated projects under the LIFE Programme concept of 'ecosystems' concerns in the first place wild flora and fauna, but goes beyond, and domesticated or cultivated species/varieties and artificial landscapes may play a role. Not: apiculture for pollination agricultural/horticultural crops Rather: protection of (habitats of) wild pollinators green infrastructure

34 Other aspects (II) incentive effect: (part of) projects that have already started are not eligible, as the NCFF support would not be necessary for realising the relevant (part of the) project multi-purpose delivery mechanism, integration in other policies, synergies

35 Demonstration effect, replicability, transferability (I) projects need to have elements/aspects that have demonstration value and can be replicated elsewhere "strategy including tasks to multiply the impact of the projects' solutions and mobilise a wider uptake, reaching a critical mass during the project and/or in a short and medium term perspective after the end of the project" Current NCFF is a pilot. Need 'proof of concept' (including the financial set-up). NCFF is not to be used for concepts that have already been proven there should be something new/innovative. What makes the proposed project different from similar existing projects? How big is the scope for replication? How many times/places/etc?

36 Demonstration effect, replicability, transferability (II) Check: monitoring, assessment and evaluation measures Check: communication, experience-sharing, networking and dissemination activities

37 Leverage effect, own financing, employment creation the higher the contribution by the project owner the better the higher the contribution by financial intermediaries, the better the more jobs created, the better

38 Furthermore long-term sustainability Low carbon footprint green procurement reporting, indicators visibility of support from the LIFE Programme

39 Questions and Answers To your keyboards!

40 Eligibility criteria for the NCFF Support Facility Katarina Malmnäs, European Investment Bank

41 NCFF Support Facility can be used for the following objectives: - Ascertaining the feasibility of potential NCFF operations; - Developing the capacity of the final recipient; - Guaranteeing the correct reporting and monitoring of the impacts on biodiversity, ecosystems and climate change adaptation. When and for what purposes to use the NCFF Support Facility varies per project.

42 Application and selection procedure Katarina Malmnäs, European Investment Bank

43 No special formalities promoters can express interest at any time by contacting the EIB at and submit information to allow EIB assessing whether the project adheres to NCFF objectives, eligibility criteria and alignment with various allocation constraints. Then: If positively screened, EIB requests the Commission to confirm eligibility; If positive, a full appraisal is launched including extensive questionnaires and site visits; If positive, the project is submitted for approval by the EIB Management Committee and Board; If approved, negotiation of contract. If agreed, signature of contract

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45 Recent developments and expressions of interest Katarina Malmnäs, European Investment Bank

46 EIB and EC are fine-tuning the criteria. From 20 expressions of interest, four projects have been identified for further due diligence. Three of the four projects have passed the initial eligibility screening with the EU Commission, which means that the detailed EIB appraisal process can now be launched. Several categories (GI, PES, PBB) are covered and more than half have Climate Adaptation (CA) components. There are interests from 1 private equity and 1 financial intermediary, the rest being for direct loans to project or public body or company/vehicle. Countries covered: ES, FI, IE, NL

47 Questions and Answers To your keyboards!

48 Thank you More info on: /ncff.htm Submit your expression of interest to the EIB via: Answer the online feedback form which will be circulated shortly.