IREN CLIMATE ACTION & CIRCULAR ECONOMY LOAN II

The operation supports the Promoter's 2024-2028 investment plan in circular economy and energy efficiency sectors. The project entails investments in municipal waste collection infrastructure, including containers, vehicles, and recycling civic centres. It also supports the transition from a street-based waste collection model to a door-to-door system, alongside the implementation of technologies to ensure traceability of waste collection and increase the rate of waste segregation at source. Additionally, the project includes targeted investments in energy efficiency measures that will contribute to reducing the energy consumption of buildings.

The aim is to support investments that promote the transition to a circular economy and enhance energy efficiency in Italy. The project is aligned with the sector priorities of both the EU and the EIB's in waste management and energy, as well as with the EIB's Climate Action and Environmental Sustainability (CA&ES) lending objective, particularly climate mitigation and circular economy. Additionally, the project meets the Paris Alignment criteria and supports the EU Circular Economy Action Plan and the European Green Deal. By improving source segregation and efficient collection of waste, the project will contribute to meet the EU and country targets for diversion of waste from landfills and materials recycling in line with the requirements in the Landfill Directive 1999/31/EC and Waste Framework Directive 2008/98/EC, as amended. The energy efficiency measures comply with the Energy Efficiency Directive, applying the "energy efficiency first" principle, and with the Energy Performance of Buildings Directive. By targeting key market failures, the Project helps address unaccounted positive externalities, such as the environmental benefits of source segregation of waste, underinvestment in recycling and circular economy initiatives, energy savings, reductions in carbon emissions, and improvements in air quality. It also contributes to long-term financing solutions to overcome the challenges of high upfront costs and extended payback periods. The project complies with Article 309 point (c) of common interest.

The Project supports investments in municipal waste collection infrastructure and energy efficiency measures. It incentivises waste reduction, improved source separation and enhances traceability and segregation rates. In parallel, the installation of building-integrated renewable energy systems contributes to decarbonising the building stock.

The operation aligns with EU and EIB policy priorities in climate action, circular economy and energy efficiency. It supports the objectives of the "European Green Deal", the "Circular Economy Action Plan", the "Energy Efficiency Directive", the "Energy Performance of Buildings Directive" and "REPowerEU" by promoting clean energy, reducing emissions and enhancing energy independence.

The Project addresses market failures such as underinvestment in recycling infrastructure, high upfront costs and long payback periods for energy efficiency and waste management components, and coordination challenges in deploying PAYT ("Pay As You Throw"). By aggregating small-scale interventions, the operation enables efficient financing and unlocks positive externalities including reduced carbon emissions, improved air quality and enhanced public health.

The operation is considered both financially and economically viable, with performance indicators aligned with sector benchmarks. Overall, the economic qualitative rate of return ("ERR") of the Project is considered "Very Good" and the broader social benefit rating is "Good".

The Promoter is experienced and well-equipped to implement the Project, using proven technologies and benefiting from national support schemes.

The EIB support to the Project will bring a tangible financial value added by lowering the associated cost of funding and offering, amongst others, a longer tenor than typically available in the market. The value added provided by the EIB is even more tangible under the current volatile market conditions, impacted by the ongoing trade conflict and geopolitical issues.

Investments in waste management will increase the recovery of materials, thereby decreasing the volume of waste sent to incineration or landfill. This supports compliance with key EU directives in the waste management sector, notably the Waste Framework Directive (2008/98/EC, amended by Directive (EU) 2018/851), the Landfill Directive (1999/31/EC), and the Packaging and Packaging Waste Regulation (Regulation (EU) 2025/40). The waste management components are not expected to fall under the environmental impact assessment (EIA) Directive 2011/92/EU as amended by Directive 2014/52/EU as they primarily involve the purchase of assets and improvements to the collection model, something that will be verified during appraisal. The energy efficiency components will contribute to reduce the energy consumption of buildings and are aligned with the objectives of the Energy Performance of Buildings Directive (2010/31/EU as amended by EU/2024/1275). The energy efficiency schemes are not expected to fall under the Environmental Impact Assessment (EIA) Directive 2011/92/EU as amended by Directive 2014/52/EU, provided that the buildings will be integrated in urban areas. Where and if applicable, and based on a risk-based approach as defined in the EIB Group's Environmental and Social Policy, the requirements of the EIA 2011/92/EU as amended by Directive 2014/52/EU, Birds Directive 2009/147/EC and Habitats Directive 92/43/EEC will be checked during appraisal. Any potential adverse environmental or social effects, such as noise pollution, are expected to be minor and will be mitigated through appropriate site and works management. Overall, the operation is expected to contribute to EIB's CA&ES objectives, with a focus on climate change mitigation through energy efficiency and promotion of the circular economy.

The Promoter shall ensure that contracts for implementation of the Project have been or will be tendered in accordance with the applicable EU procurement legislation, Directives 2014/23/EU (Concession Contracts), 2014/24/EU (Public Procurement), 2014/25/EU (Procurement in Utilities Sectors), where applicable, as well as Directive 92/13/EEC (Remedies in the Utilities Sector) as interpreted by the Court of Justice of the EU, with publication of tender notices in the EU Official Journal, as and where required. Information about selection of suppliers/contractors is not known to the EIB.