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EIB issues climate awareness bonds to finance lending into renewable projects

Well heads at Hellisheidi power plant of Reykjavik Energy (source: flickr/thinkgeonergy, creative commons)
Alexander Richter Alexander Richter 13 May 2010

European Investment Bank to use proceeds from issuance of Climate Awareness Bonds to finance future lending projects in the fields of renewable energy and energy efficiency.

In news from the European Investment Bank (EIB) it is said that, “proceeds from the issuance of ‘Climate Awareness Bonds’ will finance future lending projects in the fields of renewable energy and energy efficiency.”

The European Investment Bank has been financing geothermal development over years, to mention here are the loans that helped build the geothermal power plants in Iceland, including 120 MW Nesjavellir, 213 MW Hellisheidi and other projects.

According to the news, “The Bonds will be issued by the European Investment Bank (EIB), arranged by Daiwa Securities Capital Markets, the wholesale securities firm under the Daiwa Securities Group, and distributed to Japanese retail and institutional investors by Daiwa Securities, the Group’s retail securities firm.

The proceeds will be ring-fenced from EIB’s general funding portfolio and used for future lending projects in renewable energy and energy efficiency, both of which are identified by EIB as key areas for mitigating the effects of climate change. During the past three years, EIB has raised the equivalent of €1 billion (US$1.3bn) from international Climate Awareness Bond issues.

EIB has set a target that at least 20% of its energy projects in the European Union should cover renewable sectors and, last year, it provided €4bn (US$5bn) in financing for renewable energy projects.

EIB also extended energy efficiency investments to €1.5bn (US$1.9bn) in 2009 alone. Outside the European Union, EIB intends to accelerate its support for renewable energy and energy efficiency.

Projects for renewable energy and energy efficiency: The proceeds of this new EIB bond issue will be dedicated to future lending projects in wind, solar, hydro, geothermal and other renewable energy technologies, and for district heating, co-generation, building insulation, energy loss reduction in transmission and distribution, and equipment replacement where energy efficiency improvements are at least 20%.

“It is clear that renewable energy has become increasingly important, leading to natural resources being used without exhaustion, as well as reduction of CO2,” says Shigeharu Suzuki of Daiwa Securities Group.

“The Climate Awareness Bonds, to be issued by EIB who plays a leading role in this area, have an innovative scheme, and give investors the chance to contribute to projects related to renewable energy and energy efficiency by investing in these bonds with a very high creditworthiness.”

EIB seeks to promote climate change action across five broad areas: mitigation; adaptation; research, development and innovation; technology transfer and cooperation; along with support for the carbon markets.

EIB was created in 1958 as the long-term financing institution of the European Union. It is owned by the 27 Member States of the EU. Last year, it signed loans for €79bn (US$100bn), of which €9bn (US$11bn) was outside the European Union.”

Source: Renewable Energy Focus