Ms. Balke, you have been working at the European Investment Bank since 1999 and have had exposure to many important departments of the Bank, culminating in your appointment as Secretary General in 2023. Could you briefly remind us about the EIB’s mission? What are the primary means of action that the Bank employs to achieve its goals?
Indeed, I joined the Bank in a different century, and it has changed quite considerably since my early days. However, the EIB was designed to be the “lending arm” of the European Union, and it continues to fulfill this task. The European Investment Bank Group, which consists of the EIB and the EIF (European Investment Fund), provides – mostly long-term – loans and financing for public and private sector projects that contribute to EU policy goals. Think of equitable growth, reduced regional disparities or a just transition to climate neutrality. To leverage additional funding and increase the impact of its investments, we collaborate with other financial institutions. And we also offer Technical Assistance – that is expertise and advisory services – to help prepare and implement projects.
The EIB has long been a supporter of climate initiatives within the EU, and since 2019, it has transformed into the « EU Climate Bank. » Could you elaborate on what this transformation entails in practice? What are the key financial products and services that the EIB offers to support the climate transition? Additionally, how does the EIB ensure that investments aimed at this transition maintain the competitiveness of European industries and prevent deindustrialisation?
It’s true, reinforcing our position as ‘the Climate Bank’ is the EIB’s top priority. Concretely, this means that we committed to dedicating a minimum of 50% of our total investments signed to climate action and environmental sustainability by 2025. Over the past three years, we have already topped that goal. The Group is also on track to achieve the second major commitment laid out in its Climate Bank Roadmap, which calls for supporting €1 trillion in green financing in the critical decade to 2030. We have mobilised €354 billion in green investment from 2021 to 2023 cumulatively. Finally, since 2021, all new EIB operations align with the Paris Agreement, which means that we fulfil the third commitment of our roadmap.
As for the competitiveness of European industries: companies are simply getting on with the green transition. They see this as an important business proposition providing new opportunities. Earlier this year, a report from the International Energy Agency showed that global investment in the manufacturing of five key clean energy technologies – solar, wind, batteries, electrolysers and heat pumps – increased by 70% last year compared to 2022.
But one thing is clear too: the success of the green transition depends on it being affordable. We need to accompany those sectors and citizens most affected – agriculture, heavy industry, transport, and housing for instance.
Investing in innovative green technologies, from early-stage research to large-scale infrastructure, is essential. How does the EIB support such innovations, especially in capital-intensive green infrastructure like energy networks, and low-carbon technologies?
Supporting green innovation is indeed amongst the priorities of the EIB Group. We know that massive investment is required to develop the breakthrough technologies that can replace fossil-fuelled industrial processes. Not only do we need to support their development, but we also need to help scale them so we can lower the “green premium” – the additional cost of choosing clean technology over options that emit more greenhouse gases.
The Group is doing just that: our investments range from green steel and circular battery gigafactories to green hydrogen, wind, solar, and cutting-edge geothermal energy. We also finance modern electricity grids and energy storage. Often, our financing has an important signalling effect on the market, which is vital for getting projects off the ground, particularly new technology projects. In addition, we help to de-risk investments for private actors, without whom a successful transition wouldn’t be possible. Take the example of our partnership with Bill Gates’ Breakthrough Energy Catalyst, which invests in large-scale demonstration projects with a recognised potential to reduce greenhouse gas emissions. More and more often we see that the solutions are there. All we need to do is help them compete with fossil-fuel-based technologies.
Green hydrogen is a critical element in decarbonising sectors such as cement, chemicals, and air and sea transport. The EIB’s Green Hydrogen Fund supports infrastructure projects in developing countries, contributing to global decarbonization efforts. Can you share more about the Fund’s impact and how it aligns with the EIB’s broader strategy to support sustainable development and climate change mitigation?
Renewable hydrogen plays an increasingly important role in EU decarbonisation scenarios. According to projections, it could provide between 10 and 20 percent of the world’s final energy consumption by 2050 – a significant increase from its current share of around two percent. And you won’t be surprised to hear that it is another sector that requires significant investment. In the EU setting, the EIB is a crucial funding partner – be it via the Green Hydrogen Fund or other initiatives.
Over the past decade, we have provided over €1.4 billion in direct financial support related to hydrogen technologies, which has helped mobilise over €2 billion in overall investment. Currently, the Bank supports technologies such as electrolysers, catalysts and fuel cells. It also finances large-scale hydrogen production, including electrolysis, carbon capture and storage, and hydrogen stations.
With the Green Hydrogen Fund, which has been driven by the German Government first and foremost, we are building a bridge between innovative projects required to limit global warming and the economic development of those countries and regions most affected by climate change. With the help of the Fund, our partners in the Global South will be better equipped to integrate green hydrogen into their climate action plans and develop infrastructure projects that can make large-scale green hydrogen a reality.
The EIB recently revised its policy on dual-use investments, enabling broader support for projects with both civilian and military applications. Could you discuss the strategic reasoning behind this policy shift and how it aligns with the EIB’s commitment to maintaining its top credit and ESG ratings? What impact do you foresee this having on the EIB’s role in supporting the European security and defence sector?
Let me start with a bit of context: the EIB Group has been actively supporting investment that reinforces Europe’s security and defence industry since 2017. Immediately after Russia’s aggression against Ukraine, we expanded our Strategic European Security Initiative.
But as you say, earlier this year, the Bank has also revised its lending policies to step up support to safeguard European peace and security while preserving its own financing capacity. In May, our Board of Directors approved a new EIB Group Security and Defence Industry Action Plan. In addition, we changed the definition of dual-use, waiving a previous requirement that dual-use projects eligible for financing derive more than 50% of their expected revenues from civilian use. Projects and infrastructure used by the military or police for instance that also serve civilian needs will now be eligible for EIB Group financing. Finally, we have created a dedicated Security and Defence Office to enhance our processes for assisting European companies in the security sector. This is particularly important, because we are observing a rise in funding requests, particularly in areas such as space, dual-use research and development, drones, and military mobility and we have €6 billion that are earmarked for investments in the sector.
Emphasising dual-use technologies can help address various challenges by backing projects that fulfil both defence and sustainability objectives. Our support of initiatives for green military technologies reflects our commitment to harmonising defence needs with environmental goals. Aligning the EIB Group’s dual-use definition with that of other public institutions enhances our ability to support European peace while strengthening our financing capabilities and our outstanding ESG ratings.
This is supported in a recent report from Morningstar Sustainalytics, which ranks the EIB first among over 1,000 banks globally and assesses it as having negligible ESG risk, highlighting its leadership among banks and over 16,000 evaluated firms worldwide.
Innovation, digital transformation, and human capital are key to driving sustainable growth in the EU, as the green and digital transitions are interlinked. How does the EIB’s strategy support these areas? Specifically, how does the EIB facilitate the digital transformation of companies, particularly SMEs, and what financing options are available to help businesses embrace these changes?
You refer to what is known as the “twin transition” or the simultaneous shift towards digitalisation and sustainability. This transition indeed holds a lot of promises: it can boost economic growth while addressing climate change. It promotes job creation in new tech and green sectors. And it makes our societies future-proof. But for it to be successful we need to mobilise significant investment.
This is why, on top of our substantial green financing, we invested €19.8 billion in innovation, digital transformation, and human capital in 2023 alone. Often, our funding is geared towards small and mid-sized companies, that face challenges accessing financing for their operations and expansion. We support hundreds of thousands of them every year. In 2023, the EIB Group provided €20 billion in SME and mid-cap financing, three-quarters of which came from the EIF, the Group’s specialist provider of risk finance for small and medium-sized businesses. While the EIB is also offering tailored solutions like venture debt financing, the lion’s share of the Group’s support for small and mid-sized companies comes in the form of intermediated lending. We partner with a wide network of commercial banks, national promotional banks, leasing companies, venture capital and private equity funds, and angel investors. Furthermore, we offer technical assistance and advisory services, helping SMEs develop effective digital strategies and navigate the complexities of digital transformation.
Scaling up from a startup to a successful enterprise is a significant challenge for many European companies. How does the EIB support startups in overcoming this scale-up gap, and what initiatives are in place to help them grow? What key challenges and opportunities does the EIB address in this area?
The EIB Group is committed to unlocking essential late-stage financing for European companies, ensuring that emerging technology champions do not have to turn to large foreign investors or relocate offshore due to a lack of local funding options. Instead, these innovative companies should have the opportunity to thrive within Europe. To support this vision, we offer a long-term venture debt product specifically designed to meet the funding needs of fast-growing firms. Our collaboration with key institutional partners, such as the European Commission and the European Innovation Council, is crucial to achieving this goal.
In our efforts to bridge the scale-up financing gap, we have launched the European Tech Champions Initiative (ETCI). This fund-of-funds is managed by the EIF and builds on its extensive work in the venture capital markets in Europe. Contributions from various EU countries, including Germany, France, Spain, Italy, Belgium, and the Netherlands, have been key to make this initiative possible. With a fund-of-funds structure totalling €3.85 billion, the initiative aims to invest in large-scale venture capital funds that will provide growth financing to European tech champions in their late-stage development. We anticipate making 10-15 investments in these funds, each around €1 billion, with the goal of mobilising over €10 billion in investments for innovative growth-stage companies. This initiative also focuses on boosting funding for high-tech firms seeking to raise amounts exceeding €50 million, enabling them to compete globally while remaining in Europe. As we recognise Europe’s strengths in nurturing green technologies, we also understand the need to scale them effectively to meet climate targets and enhance competitiveness.
As the European Investment Bank plays a crucial role in supporting the EU’s economic and environmental goals, what are your hopes and priorities for Europe in the upcoming legislative period? Considering the challenges and opportunities ahead, particularly in climate action, digital transformation, and innovation, what areas do you believe should be the focus of the new legislature?
Europe’s tasks ahead are anything but insignificant. We need to protect our democracy, strengthen our social model, build our capabilities to defend ourselves, and create new prosperity.
In June, the EIB Board of Governors, consisting of EU Ministers, has endorsed eight priorities that will enable the EIB Group to support Europe’s overarching goals. We will aim to consolidate the EIB as the Climate Bank, accelerate digitalisation and technological innovation, increase investments in security and defence, strengthen regional development, develop innovative financing for agriculture and bioeconomy, boost investment in social infrastructure, pioneer the Capital Markets Union and, finally, reinforce our activities outside the EU. Our success will hinge on strong partnerships with the European Commission, other institutions and EU countries. Thanks to mandates and guarantees from the EU budget, the EIB Group has a greater capacity for risk-taking, enabling us to attract even more private investment. The tasks ahead are demanding, but if we succeed, our efforts will greatly contribute to creating a continent where people thrive and feel fulfilled.