VALOGREENE SPAIN CIRCULAR ECONOMY PLANTS

The project will finance five waste treatment plants utilising pyrolysis technology with an innovative layout. These facilities will enhance resource efficiency and promote a circular economy by generating secondary raw materials, while reducing greenhouse gas emissions by diverting waste from landfill and energy recovery.

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. It will also support the transition to a circular economy in line with EC Circular Economy Plan and will contribute to achieving climate change objectives by reducing direct GHG emissions from waste management. The project meets the Paris Alignment criteria and supports the EU Circular Economy Action Plan and the European Green Deal. The investment programme is expected to contribute to EIB's lending priority objectives on Climate Action and Environmental Sustainability. The project components aim to meet the requirements of regional and national waste policies and regulations, particularly those focused on achieving higher levels of material recovery from waste. Therefore, they will facilitate the transition to a more circular economy. Additionally, the project will contribute to climate change objectives by reducing direct greenhouse gas (GHG) emissions from waste treatment. Thus, the project is expected to support climate action and environmental sustainability (CA&ES) objectives, particularly climate mitigation and the transition to a circular economy. The project is conforming with Article 309 point (c) of common interest. Additionally, certain regions where the portfolio of facilities will be developed are classified as EIB Cohesion Priority Regions. Consequently, parts of the project are conforming with Article 309 point (a) for projects aimed at developing less-developed region, expecting to represent 42% of the project costs. The final contribution to these regions will be further analysed during appraisal.

The Project aligns with the InvestEU objective of Environment and resources, in particular with respect to projects and enterprises that implement the circular economy by integrating resource efficiency aspects in the production and product life cycle, including the sustainable supply of primary and secondary raw materials.

The Project supports the European Union's legal requirements, Circular Economy Action Plan, and the Green Deal. It is aligned with the national and regional Circular Economy Strategies and Waste Management Plans.

The Project addresses key market failures, including the lack of recognition of waste diversion benefits, insufficient investment in recycling and the circular economy, and the need for long-term financing to cover high upfront costs and extended payback periods. Recycling technologies such as the one developed in the Project also contribute towards a reduction of the EU's fossil fuel imports, fostering applied innovation and strengthens the recycled pyrolysis oil and char supply chains. Given the capital-intensive nature of the investment, and inherent technology risk coupled with its unproven profitability, the EIB intervention will be key in providing the required resources to carry out this major investment.

Considering the large scale of the investment involved, the Project is expected to have a positive impact on the local economy, supporting sustainable economic growth and job creation and economic and social cohesion. Three plants are located in the Spanish Autonomous Regions of Castilla y Leon, Galicia and Castilla La Mancha, considered as EIB Cohesion priority regions. The Galician plant also falls within a Just Transition Mechanism Area.

The plants are intended to treat around 240,000 tons of waste per year, mainly non-recyclable plastic waste. The Project supports greenhouse gas emission reductions by facilitating the recovery of high-quality secondary raw materials, and mitigates the environmental and climate impacts associated with current waste disposal practices, particularly landfilling.

The Bank is acting as a cornerstone stakeholder in the Project. The EIB's involvement is critical to attract the required debt finance to fully implement the Project, bringing in affordable pricing during a long tenor, for an innovative high-risk project. Construction and execution risks are difficult to apprehend for this type of innovative projects. The Bank provides a signal of the Project's quality, facilitating financing from commercial banks.

Given the Promoter's experience, there is limited need and scope for technical contribution from the Bank.

The project would not have been carried out to the same extent by the EIB without the InvestEU support.

The new waste recycling plants will decrease environmental and climate change impact by increasing recovery of materials, in particular plastics, from waste. Therefore, it will notably reduce the amount of waste incinerated or landfilled, in line with the Waste Framework Directive and Landfill Directive targets. The investments under this operation will fall under Annex I of the Environmental Impact Assessment (EIA) Directive 2011/92/EU as amended by Directive 2014/52/EU. The EIA Report for four of the facilities have been published, and the relevant Decision is available on the competent authorities' website, while the EIA report for the Aragon plant has been submitted to the authorities. The requirements of other relevant EU legislation, primarily the Industrial Emissions Directive (2010/75/EU), will be verified during appraisal, along with the Waste Framework Directive 2008/98/EC, the Habitats Directive 92/43/EEC, the Birds Directive 2009/147/EC, and the Directive 2008/50/EC on ambient air quality and cleaner air for Europe. The project is expected to contribute to Climate Action and Environmental Sustainability (CA&ES) objectives, in particular to climate change mitigation and circular economy.

The promoter has been assessed by the EIB as being a private company not being subject to EU rules on public procurement or concessions. However, if at the project appraisal, the EIB were to conclude that the promoter is subject to the EU public procurement legislation then the Bank would require the promoter to apply those rules. Information on awarded main suppliers/contractors for the implementation of the envisaged operation is partially available. The list of already awarded procurement counterparts includes companies based in Spain and Italy. The final list of suppliers/contractors will be analysed during appraisal.