Portugal is the first EU State to team up EIB to support sustainable cities
The European Investment Bank (EIB) and the Portuguese Ministry for Environment, Spatial Planning and Regional Development signed an agreement in Lisbon on 14 November 2008 to strengthen co-operation in financing sustainable urban development.
The agreement signed by Mr Carlos da Silva Costa, EIB Vice-President and Mr Francisco Nunes Correia, Minister for Environment, Spatial Planning and Regional Development, is under the joint European Commission and EIB initiative, supported by the Council of Europe Development Bank, Joint European Support for Sustainable Investment in City Areas (JESSICA).
EIB Vice President in charge of Portugal, Carlos da Silva Costa said: “This agreement shows our determination to proceed quickly and join forces with EU Member States as well as local authorities for a friendlier and more sustainable city environment in Europe. As Portuguese, I am most happy that Portugal is the first Member State to join forces with our JESSICA initiative for sustainable investment in city areas”.
The Agreement of Principles outlines ways in which:
- financial and non-financial cooperation can take place to promote joint financing of projects and programmes development,
- strengthen further coordination and exchange of information to ensure complementarity, cohesion and coordination and promote joint activities;
- promote joint technical work and policy dialogue and to enhance the link between analysis, policy and investment initiatives at all levels.
The Agreement with Portugal follows the Agreements signed by EIB in October 2008 with the regions of Wielkopolska in Poland, and Galicia in Spain.
JESSICA is focused on the promotion of sustainable investment and growth in urban areas. This initiative enables the EU Member States and their regions to use some of their EU Structural Fund allocations, to make repayable investments in projects forming part of an integrated plan for sustainable urban development. These investments, which may take the form of equity, loans and/or guarantees, are delivered to projects via Urban Development Funds and, if required, Holding Funds. In Portugal the envisaged contribution out of the European Regional Development Fund (ERDF) is EUR 100 million.
JESSICA is a response to the request from several Member States and the European Parliament to give special attention to the need for renewal and/or regeneration of certain urban areas and is based on a perceived market failure in the urban sector or, more specifically, on the lack of investment funds to finance integrated urban renewal and regeneration projects in pursuit of more sustainable urban communities.
Note for the editor:
The European Investment Bank Group, the banking group promoting European objectives and financing European projects, provides capital investment aimed at modernising the economies of the Member States and the countries close to the Union.
In 2007, the European Investment Bank lent a total of EUR 47.8 billion for projects promoting the European Union’s policy objectives. Finance for the then EU-27 Member States represented 87% of its activities and amounted to EUR 41.4 billion. To fund its activities, the EIB raised an aggregate amount of EUR 55 billion on the international capital markets through 236 bond issues in 23 currencies. Owned by the Member States, the EIB (with its AAA rating) is the world’s largest supranational issuer.
In 2007, the European Investment Bank provided a total of EUR 1.5 billion for projects in Portugal for achieving the Union’s objectives and the Bank’s six top priorities: economic and social cohesion; a competitive and innovative European economy; efficient and easily accessible trans-European transport and energy networks (TENs); support for small and medium-sized enterprises (SMEs); the "climate change” dimension of environmental protection, but also that of conserving natural resources and improving the quality of life in urban areas; as well as the objectives of efficiency, diversification and security in the energy sector.
The Bank completed in 2007 a preliminary evaluation of JESSICA, undertaken on behalf of the European Commission (DG Regio). The aim of the study was to:
- review urban renewal and development schemes in a sample of Member States and to identify the existing financial vehicles for urban investment, also in non-convergence regions;
- analyse how financial engineering instruments can address any perceived deficiencies; and
- establish the interest in using UDFs to deliver these actions and products.
The key findings of the study are that a flexible approach is needed to adapt JESSICA to the diverse needs and institutional frameworks of the different Member States. In order to be successful, this tailored approach needs to redress the fragmentation which has too often blocked the timely implementation and effective funding of sustainable urban regeneration and development ventures. Further action required to complete the launch of JESSICA must therefore be adapted to country circumstances and appropriately phased, taking into account the proposals of the authorities concerned. A clear sense of “ownership” of the JESSICA tool needs to be established by Managing Authorities, and the Bank has launched implementation studies to launch pilot JESSICA operations in several Member States, including the United Kingdom, Germany, Italy, France, Greece and Bulgaria, with others expected to follow soon.