Financing urban circular economy

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1 European Investment Bank Financing urban circular economy Circular Cities Conference Bocconi University, 12 March 2018 Jonas Byström, EIB 16/03/2018 European Investment Bank Group 1

2 EIB - The EU and CE bank Largest multilateral lender/borrower in the world Ca. 450 projects in over 160 countries per year by staff in Luxembourg HQ and 40 local offices 2017: 78bn lent, 90% in EU, 21% environment, 23% infrastructure, 18% innovation, 38% SMEs Lending, blending, advising with different types of products matching project sizes and risk profiles Raises funds on capital markets and pass on favourable borrowing conditions to clients As the EU Bank, supporting EU circular economy transition is high on the EIB agenda In EIB lent EUR 2.4bn to CE projects 16/03/2018 European Investment Bank Group 2

3 Financing a Circular Economy Traditional CE projects New business models Support investments to do more and better in response to increasing recycling targets and EU circular needs and ambitions May involve new waste streams, new technologies, uncertainty on feedstock and output off-take side and related risks Need for thorough assessments of technologies, contracts, markets/competitors business plans etc. Need for ways to mitigate residual risks such as risk sharing and guarantees, promoter/stakeholder equity involvement, adjusted minimum credit metric levels, etc. Sharing/leasing models require a cash flow rather than collateral based approach to finance and more focus on earnings Pay per use, lease models imply longer financial relations, balance sheet extension Contracts and credit worthiness important in regard to asset security, ownership etc. New dimensions of residual value and challenges with asset evaluation/ tracking Focus on supply chain and working capital financing, and increased need for precommerce/start-up financing 16/03/2018 European Investment Bank Group 3

4 Circular city challenges and opportunities Prepare roadmap for an urban circular transformation, identifying: circular stakeholders: citizens, industry/commerce, education, media, civil society... authority roles as circular strategist/visionary, enabler, facilitator and driver circular win-win opportunities: - addressing urban problems with circular solutions - making the city livable through circular initiatives - urban waste/by-product streams with re-use/recycling potential - companies/supply chains with potential circular synergies target sectors (e.g. construction, food, trade ) effective circular approaches, business models and solutions circular obstacles and enabling factors good circular city examples as inspiration suitable sources of financing and funding for circular projects 16/03/2018 European Investment Bank Group 4

5 Circular City Funding Guide Guide is prepared under the Urban Agenda Partnership on Circular Economy Justification for the proposed Guide: Cities/promoters need external sources of funding/financing for their CE initiatives Lack of awareness on existing sources of funding/financing for CE investments, advisory & capacity building, conditions for accessing funding/financing Lack of knowledge on best practice for setting up funding/financing schemes/ programmes for circular city business models and projects A lot of general CE information (also financing), but limited focus on city context/ needs, and information is not easily accessible Target group and beneficiaries of the Guide: Cities with circular interest and ambitions, both starters and leaders circular city project promoters (public and private) funders/financiers 16/03/2018 European Investment Bank Group 5

6 Preliminary scope and web structure Comments? Introduction page Suggestions? Circular city context Guidance for fund seekers Guidance for funders Circular approaches, stakeholders, business models, glosssary Circular project type definitions and related funding needs Circular city development roadmap Design/set-up of circular funding programme/scheme Project screening and assessment criteria Moniotoring/reporting indicators Project/funding type applicability matrix Funding sources for projects Funding sources for technical assistance Guidance for funding applications Circular city funding case studies Links from level 3 pages to existing sites, documents and other resources where justified and needed 16/03/2018 European Investment Bank Group 6

7 Jonas Byström Lead Engineer Urban Development Division Projects Directorate Phone: (+352) /10/ /03/2018 European Investment Bank Group 7