Vice-President Ricardo Mourinho Félix’s keynote speech at the Ordem dos Economistas (the Portuguese Chamber of Economists) on 12 March 2022, at the “Conferência Portugal: objetivo crescimento” (Conference Portugal: growth objective)


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>@Caroline Martin/EIB

Your Excellency Mr. Chairman of the Ordem dos Economistas [the Portuguese Chamber of Economists],

Ladies and Gentlemen,

 

Let me start by thanking the Ordem dos Economistas and its Chairman, PhD António Mendonça, who I congratulate for the recent election, for the invitation.

It is a pleasure to take part in this conference and share with you the role that the European Investment Bank has been playing in financing the economy, fighting climate change and supporting sustainable development.

In times of peace, in the aftermath of the financial and sovereign debt crisis in the euro area, the European Investment Bank redefined its policies.

The European Investment Bank is the bank of the European Union. And, therefore, the priorities of the European Investment Bank are the political priorities of the European Union.

The priorities of the climate and digital transitions.

The European Investment Bank has adopted sustainable transport and energy financing policies. To meet the investment needs of the Member States of the European Union.

To support sustainable mobility. To support smart cities. To promote the decarbonisation of our economies and lives.

Then came the pandemic. And it was during the pandemic that the European Investment Bank kept its focus.

It was in the midst of the pandemic that we adopted the Climate Bank Roadmap.

It was in the midst of the pandemic that we made ambitious commitments to finance climate change mitigation and adaptation policies.

It was in the midst of the pandemic that we aligned all our activities with the Paris Agreement. We were the first bank to do so.

The first bank to eliminate the financing of fossil-based projects and align all our operations with the Paris Agreement, to foster the transition to a zero carbon economy.

But keeping thid focus did not mean ignoring the world around us.

And we have fully responded to the pandemic and to the economic crisis caused by the pandemic.

We were already supporting BioNTech in 2019 in their research for an innovative technology for cancer treatment: M(essenger)RNA technology.

It was in the first days of 2020 that BioNTech contacted the Bank. For a new project. A new type of Coronavirus had emerged and was infecting the population of Wuhan in China. The new virus was of unknown origin and was causing a highly contagious respiratory disease that evolved rapidly into a lethal infection.

And BioNTech believed that mRNA technology could be used to produce a new generation vaccine.

An effective vaccine against this new virus.

We have funded BioNTech with an additional 100 million euros for research and development of this new vaccine.

This was how it all started. It became what many of us received and know as the Pfizer-BioNTech vaccine against COVID-19.

And this is also why we can be together here today and be healthy.

But we have done more. We have been involved in the coordinated response to the economic effects of the pandemic at the EU level.

With a guarantee from the Member States of the European Union of close to 25 billion euros, we have been mobilising funding of almost 200 billion euros since 2020.

Financing for companies. For SMEs. Allowing SMEs to maintain their activity, so they can access funding to pay salaries, pay invoices and also invest in the green transition and in the digitalisation of their businesses.

Portugal was one of the largest beneficiaries of this instrument. Through Portuguese banks, we are mobilising around 11.6 billion euros. This funding is close to 5% of the Portuguese GDP and is reaching more than 22 000 SMEs.

And we have also funded the fight against the pandemic in developing countries.

Through the COVAX initiative, we have mobilized, to date, more than 3 billion euros with the European Commission and Member States. More than one billion doses were distributed in 144 countries, helping developing countries to access the vaccine.

Because the fight against COVID, like the fight against climate change, is a global fight.   

And yes. The global and European economies were on track for a steady recovery after almost two years of the pandemic crisis.

And until three weeks ago, it would be clear what I would have told you today. I would have told you about what we have done and how we look forward to the future.

If I spoke to you three weeks ago, I would point out that the overall activity of the European Investment Bank in 2021 reached a record of around 95 billion euros and strengthened its counter-cyclical role.

If I spoke to you three weeks ago, I would say that our funding has become even more relevant in times of crisis and has preserved many businesses and jobs.

If I had spoken to you three weeks ago, I would say that in Portugal, EIB activity in 2021 reached an all-time high of 5.300 billion, or around 2.5% of GDP.

I would tell you that the European Investment Bank is today the largest multilateral donor in promoting environmental sustainability.

I would highlight, of course, the fight against climate change and the inclusive and just post-pandemic recovery as an unprecedented challenge in modern history.

And I would say that only through sustainable development could we achieve these goals.

And it would have been easy to explain it. Because climate change is a global, planetary phenomenon, with no borders or barriers.

A phenomenon that systematically threatens the security of millions of human beings and their livelihoods.

Be it in Europe or Asia, Africa or America.

In the southern hemisphere or in the northern hemisphere.

Unfortunately, and for the worst possible reasons, the last few weeks have shown us in the toughest and cruel way that nothing we believed in is guaranteed.

The peace, freedom and democracy we have acquired in the world order, especially in Europe in the post-war era and in Portugal since April 1974, are again being challenged.

And it is in a context of war in Europe that we come together today. In a context that we all want to quickly come to an end, but that none of us see an end to any time soon.

And it is in this context that we have to look to our common future.

Looking to rebuilding a free, sovereign, just and prosperous Europe. A resilient and autonomous Europe. Only in this way will Europe be sustainable.

An uncompromising fight for human rights towards the most vulnerable, promoting the values of solidarity and democracy, peace and European sustainability.

In the fight for human beings. Promoting the rights and dignity of refugees arriving in the European Union and Portugal.

Recalling our important role in supporting social inclusion and cultural diversity.

And starting by the most important: we need to show that we live up to the existential challenge we face. Now we must do so.

As in Lou Reed’s song, “This is the time, because there is no time.”

From the first moment, the European Investment Bank has condemned the invasion of Ukraine, together with the Council, the Parliament and the European Commission.

An invasion that violates the most basic norms of international law, which is destroying a modern, prosperous and increasingly important country in the European context.

Since the first moment, we have been reflecting on how we could act and continue to support a country that was undergoing its transition to modernise its economy, strengthen its institutions and improve the quality of life of its citizens.

Altogether, Ukraine is one of the main countries of operation of the European Investment Bank outside the European Union. We know Ukraine well.

The European Investment Bank has an office in Kyiv, as it has in all EU countries. An office that supports the development of our operations in Ukraine.

And it was this knowledge of Ukraine and the involvement of the European Investment Bank with Ukraine’s sovereign state that allows us to finance Ukraine even during a horrific war.

The European Investment Bank approved 668 million euros of funding for Ukraine a week ago to address the most basic and immediate needs of the Ukrainian people. So that Ukrainians have access to food. So that Ukrainians have access to medication. In order for Ukrainians to have access to fuel.

So that they can survive under a barbaric war.

This funding was intended to support the development of Ukrainian SMEs and Ukraine’s food exports and agro industry supply chains up to a week ago.

This has been the most significant financial response so far, in partnership with the European Union, and with those on the ground ensuring that this funding is fit for purpose.

And it is in this context that I wonder what sustainable development really means today.

Yes. What does sustainable development mean today?

Does it still mean the same as it did until three weeks ago?

Was not the concept of sustainable development itself bombed and murdered?

What I will convey to you are my own opinions and reflections. Those of the Vice-President of the EIB. And these, of course, in the days we live in, are evolving, as is the Bank’s own position.

Once again, in our lives, the emergency overtakes the priorities.

After the financial crisis, after the sovereign debt crisis, we were still recovering from the pandemic crisis when a new crisis arrived.

A war, a humanitarian crisis and a new economic and financial crisis.

What about the environmental crisis? Can we leave environmental sustainability aside to focus on the crisis resulting from this war?

If you notice, during the financial crisis, we have prioritised fiscal expansion, leaving fiscal sustainability and environmental sustainability aside.

The sovereign debt crisis came and the time was to ensure fiscal discipline. To prioritise fiscal sustainability and to leave aside environmental and social sustainability.

And then it was possible to balance the public sector accounts, to promote social cohesion and to prioritise environmental sustainability.

But the pandemic has brought a health crisis and a new economic crisis. And we have not lost focus on environmental sustainability.

Until three weeks ago, sustainability had three dimensions: financial and fiscal sustainability, economic and social sustainability and environmental sustainability.

And it is this concept of sustainability that has been destroyed. It has been bombed during the last two weeks.

We therefore need to rethink it, to rebuild this concept and make it resilient.

If we want to promote real sustainability, we need to create a new concept: global sustainability.

Sustainability that is fiscal, financial, economic, social, environmental, but also geopolitical.

A concept of sustainability, and of sustainable development, that would enable us as humankind to live sustainably in a truly prosperous world where improved living conditions are sustainable in several dimensions.

And this is a global challenge. It is an existential challenge.

It could be argued, and rightly so, that environmental sustainability is also an existential challenge. And yes, it is. As the European Investment Bank has put it so many times. But if we are not able to ensure geopolitical sustainability, it will be hard to ensure sustainability as we knew it up to three weeks ago.

We will not live to tell the story. We will not exist until 2030 or 2050 to be able to ensure environmental sustainability and enjoy the world we have dreamed of.

Allow me, therefore, to develop somewhat the concept of global sustainable development.

Global sustainable development means that each aspect of sustainability is seen as a necessary condition, but that none of them is a sufficient condition.

In financial and budgetary terms, the European Union’s response to the pandemic crisis shows that good policy coordination is essential for preserving sustainability.

It shows how appropriate counter-cyclical policy can preserve employment and income, and can ensure a swift recovery while promoting economic and socially sustainable development.

But this was only possible because the European Commission, the Member States, the European Investment Bank, the European Central Bank and the European Stability Mechanism acted together.

Within their powers and preserving the decision-making autonomy of each institution.

The instruments that were created and were, or are being used, in response to the pandemic crisis should be preserved. They can be used again to respond to a new crisis.

However, they cannot and should not be used at all times. Otherwise, they themselves generate unsustainable development, thus becoming ineffective and counterproductive.

Let me be clear. Liquidity support for companies should only remain as long as companies, for reasons unrelated to their idiosyncratic performance, do not have access to liquidity. It cannot serve to preserve economically unviable companies.

In terms of environmental sustainability, the world faces a huge challenge. Fiscal and financial sustainability are essential to ensure environmentally sustainable development.

It is in this context that the European Investment Bank, as the European Union’s climate bank, will continue to play a leading role.

A key role in combining private funding with public funding.

Those who think that environmental sustainability is just a matter for governments are misled.

Public resources alone will never be sufficient for a successful transition.

A just and inclusive recovery and climate transition require the strong engagement of all. Governments, businesses, citizens, regulators, banks, investors and consumers.

Businesses need to increasingly adopt responsible strategies that invest in their own sustainability.

Businesses that are not sustainable will hardly exist in five years and will not resist the challenges of the future. This is precisely why they are not sustainable.

Businesses need to reinvent and innovate. This will also require fostering complementarity between public and private funding for the development of new technologies.

This is why partners such as the European Investment Bank are needed. They mobilise the private sector on its path towards sustainable development.

A path where not all innovative projects will have the expected returns, but where a patient partner with technical knowledge and risk sharing capacity can contribute to their implementation.

These are key features of a public policy bank.

The patience to support projects and to wait for their returns over the longer run.

It is in this context that the European Investment Bank will play a central role. In partnership with the public and private sectors, so that the financing of the European budget and the Recovery and Resilience Fund can catalyse private investment and mobilise the necessary resources for a successful and just transition.

A transition that preserves the quality of life of citizens in the European Union and beyond.

And let us not forget that the Recovery and Resilience Plan provide the necessary resources with to finance this project, demonstrating that the Union and European solidarity are the best tools at our disposal.

We cannot fail to implement them. We do not have such a right. We have an obligation to achieve the goals of sustainable development.

But mobilising private resources also requires the development of financial markets.

Financial markets are essential in channeling funds towards sustainable development.

The EIB has played a leading role in this respect.

In 2007, we issued the first green bond. What was a niche and innovative idea, 14 years and 40 billion euros later, is a market trend.

We support the European Green Taxonomy. To reduce uncertainty. To increase comparability between assets and to ensure that investors put their money on what they actually want to finance. There can be no 50 shades of green.

But the transition to carbon neutrality is far from being taken for granted. We face a huge economic and financial challenge, but also a huge challenge for global social sustainability.

It is therefore a challenge with implications for geopolitical sustainability.

The transition to a carbon-neutral economy is most likely the largest global redistribution of wealth that we will witness in our lives.

If the transition to carbon neutrality is successful, in less than 20 years the reserves of fossil fuels, oil, gas, coal will have no value. They will not be assets anymore, but environmental liabilities instead.

As a result, a number of regions in the world that have based their income on the extraction and export of fossil fuels will no longer have their main source of income.

If they do not invest the current income in the transformation and diversification of their economies, they will be failed economies and countries.

On the other hand, the raw materials needed for a carbon-free world will generate wealth in other parts of the world, which will increase their wealth simply by exploiting these resources.

This transfer of wealth will create new poor and new rich.

It will create social tensions between those regions that already today rely on good policies to diversify their economies for a prosperous future and those, which, already today and with sound economies, will see their wealth increase further.

And this perspective will become clearer. This is why the transition needs to be just. In order to be socially sustainable.

And while this is a challenge currently addressed by the Just Transition Mechanism in the European Union, this is not the case on a global level.

If the transition is not socially just, it will not happen. Because there will always be those facing the threat of poverty, supporting those who opportunistically defend maintaining an economy that does not take care of environmental sustainability.

This transition will be even more relevant in Africa. The development of sub-Saharan Africa will lead to an increase in current electricity consumption of about five times.

The development of sub-Saharan Africa is the promise of a more prosperous life for many millions of Africans and an essential step towards Africa’s full participation in the global economy.

The necessary power generation will have to be based on renewable energy; otherwise, the transition to a decarbonised economy on a global scale will be at stake.

A just transition must not fail to provide sub-Saharan Africa with the technology needed to make this transition.

This will involve resources. It will entail real cooperation for sustainable development.

For this reason, the European Investment Bank has increasingly devoted resources to sustainable development outside the European Union.

In 2021, the European Investment Bank created an entity dedicated to the development of our activities outside the European Union.

To give real expression to the policies of the European Union outside the European Union.

Social sustainability is essential and a factor of utmost importance for geopolitical sustainability. To ensure that the green transition does not exacerbate existing geopolitical tensions and does not create new geopolitical tensions.

Let us be clear. The rise in geopolitical tensions in several regions of the world is highly linked to the direct and indirect effects of climate change and the decarbonisation of the economy.

And the mitigation and adaptation policies combating climate change need to take into account not only economic and financial impacts, but also social and geopolitical implications.

And it is precisely in the field of geopolitical implications that we increasingly have to reflect on the world we live in today.

So that we can continue the energy transition while preserving freedom, sovereignty and fully respecting the rights of citizens.

Promoting a just distribution of wealth. Mobilising resources from those who will benefit from the energy transition to help adapt the economies most exposed to the impacts of climate action and diversify the economies most dependent on fossil fuel extraction.

Taking advantage of Europe’s leadership in the production of green technologies and embracing digitalisation as the technology needed for innovation and preserving this leadership.

Assuming a clear commitment to European-based innovation and contributing with this innovation so that the energy transition can benefit everyone.

2020, the black year of the pandemic and long lockdowns. The year when production fell unprecedentedly in the post-war period on a global scale, CO2 emissions only fell by a meager 7%. 

How can we reduce greenhouse gas emissions by more than 50% by 2030 and achieve carbon neutrality by 2050 with today’s technologies?

A 50% reduction today would mean a drastic reduction in the quality of life that no society would accept.

It would mean going back centuries in our way of life.

It would mean returning to a pre-industrial way of life.

It would imply a massive and unsustainable increase in inequalities on a European and global scale.

It would imply an increase in unsustainable geopolitical tensions.

In order to achieve the objectives we propose, there is only one response: innovate, develop the necessary technologies and disseminate them rapidly on a global scale.

Eliminating dependencies in energy production and supply, diversifying energy production and energy sources, accelerating the uptake of renewable energy and low-carbon gases and increasing energy efficiency.

To move from words to acts, it is necessary to do so and to ensure the necessary human, technological and financial resources.

And this is where Europe can make a difference. Because Europe is a leader and should invest in this leadership.

This is the reflection to which we are all invited.

This is the reflection that the European Investment Bank has been doing and the urgency of which has simply increased over the last three weeks.

To fund innovation, we work with innovators. We are the largest venture capital investor in Europe and we are committed to supporting start-ups and scale-ups.

So that innovative ideas can emerge and spread.

So that innovative ideas can move from the university to the manufacturing environment.

So that innovative ideas can gain industrial scale and become economically and financially viable.

We have had a strong focus on renewable energy for a long time and we remain strong on innovation today.

This is why we fund research and development projects on industrial solutions for the production of green hydrogen. This is why we finance floating offshore maritime wind production.

We take the risk of the most innovative projects, with the awareness that this is the only way to make a difference, with successes and failures, because this is the case when investing in innovation.

This is exactly what public policy banks like the European Investment Bank are for. Or like Banco Português de Fomento.

To mobilise public and private resources for the most innovative projects and those with the most potential. To share the risk of innovation.

And so that public resources, which will never be sufficient, can be pooled with private resources and the willingness of entrepreneurs and investors who trust our analytical capacity.

A strong commitment to innovation and the dissemination of new green technologies promoting energy autonomy, the rapid incorporation of renewable energy and the industrial scale development of low-carbon gases are essential.

Not only for environmentally sustainable development, but for global sustainable development.

This is the enormous challenge to which we are summoned.

So that we can all see this brave new sustainable world. And so that we are not cyclically confronted with the current horrible world we have been living in for three weeks.

Because history doesn't have to repeat itself.

History cannot be repeated.

It is up to us to write our story and make sure that our children and grandchildren will also write their own.

Arthur C. Clarke summarised all this in a sentence: “The future is not to be forecast, but created.”

And this is our time. This is the time, because there is no time.

Thank you very much.