EIB Forum 2003 held in Dublin on 23 and 24 October focused on Europe's long-term energy and water policies. It gathered some 350 participants from all over Europe to listen to and exchange views with 25 renowned speakers.
EU Commissioner Margot Wallström affirmed that the "world's energy policies will become climate change driven. The ultimate goal is the low carbon economy - an economy based on renewable energy sources". "Business as usual" long-term energy scenarios predict that global CO2 emissions will more or less double by 2030, while scientists are convinced that global greenhouse gas emissions - the most important being CO2 - need to be reduced by 70 per cent if the climate is to be stabilised. Under the Kyoto Protocol, the EU is committed to reducing its greenhouse gas emissions by 8% from 1990 levels until the year 2012, which according to the Commissioner, should be seen as "a first step only".
The backbone for achieving a reduction of greenhouse gas emissions is the EU's Emission Trading Scheme that will start in 2005. Under this scheme, the Member States will set limits on CO2 emissions from industrial installations by using allowances as to how much CO2 these companies are allowed to emit. These allowances will be tradable so that installations that emit less than their allocation of allowances can sell them, and installations that emit more can buy in allowances. This will provide an incentive to reduce emissions where this is cheapest. It also means that investing in a more efficient energy use and renewable energies produces such allowances which, when sold, add to a project promoter's cash flow.
The President of the EIB, Philippe Maystadt, expected this scheme to facilitate the Bank's support for renewable energy as it will contribute to make more projects financially viable and bankable. The EIB President reiterated the Bank's full support for the EU's climate change policies and pointed out that the Bank's financing of renewable energy projects has increased already, over the last two years, to some 20% of its financing in the energy sector. However, it became also clear that for achieving the EU's climate change policy objectives, Bank loans need to be complemented by grant money, and not least by efforts on research and development.
The Forum examined the activities that the EU Member States have undertaken to achieve the commitments made at the Kyoto Protocol. It explored alternative energy perspectives, their financial viability and the investment strategies needed for their implementation. It also focused during its second day on issues surrounding the management of water resources in Europe, on investment needs in the energy and water sectors and on innovative approaches for their financing.
Among the others speaking at the Forum were the Taoiseach, Mr Bertie Ahern TD, Minister for Finance, Mr Charlie McCreevy TD, Chairman of the UN Commission for Sustainable Development and Norway's Minister for Environment, Mr Børge Brende and Hungary's Minister of Economy and Transport, Mr Istvan Csillag.
In summarising the conclusions of the Forum, EIB Vice President, Michael G Tutty, said that it was clear from the participants that environmental sustainability was a key issue, both in the energy and in the water sectors.
On energy, he said that the world energy policy is becoming climate driven, with the low carbon economy as the new paradigm, based on renewable energy. Market liberalisation had been highlighted by speakers as a positive development but bringing security of supply issues. Without major policy reform, Europe will remain highly dependent on imported fossil fuels with consequences for CO2 emissions.
In terms of technology, the speakers had indicated that wind power is still the best renewable energy source and is getting more competitive. New options being developed include photovoltaic and fuel cells, but these will not be important contributors for quite a while. Meanwhile as these are developed, we will still be heavily reliant on existing sources and must make them as efficient and environmentally friendly as possible, including changing consumer behaviour.
A figure of US 2 trillion dollars for investment needs in the energy sector over the next 30 years had been mentioned.
In the water sector, stress had been put on the necessity to implement the EU Water Framework Directive, which is the sustainable development model for the sector. A change of attitude is needed with better integration at all levels, integrated river basin management and agriculture reform. Funding the massive investment which will be needed will require imaginative mechanisms.
In setting out the EIB response to these needs at the Forum, the Bank made it clear that it is ready to do more in the renewable energy and water area in support of viable projects. Specifically on the energy side, in support of the EU Emissions Trading Scheme, the Bank announced that it was setting up a Dedicated Financing Facility to provide finance for companies investing in Green House Gases (GHG) mitigating investments and a Transactions Assistance facility to promote Clean Development Mechanism and Joint Implementation projects. It was also looking at the possibility of a Carbon Investment Trust and a Greening Fund.