Transcript What is the NCFF and why was it set up?

How to apply to the NCFF?
James Ranaivoson, EIB
Brussels, 8/05/2015
NCFF Structure
LIFE
EIB
Environment / Climate
NATURAL CAPITAL FINANCING FACILITY
Co-investors
FINANCIAL INSTRUMENTS
private and/or
public
TECHNICAL ASSISTANCE
EUR 100-125m  EUR 50m First Loss for EIB
EUR 10m
Project
level
Investments
DIRECT INVESTMENTS IN
PROJECTS
INTERMEDIATED INVESTMENTS:
Private Equity Funds,
Credit Lines to Banks
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Recent developments & expressed interests
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 NCFF Delegation Agreement signed 19 December 2014 and officially
launched 16 February 2015
 EIB and EC are fine-tuning the criteria.
 Roughly 20 expressed interests are under consideration with 6 seen
“potentially serious” for which EIB is requesting more information from
the promoters.
 However, none is documented enough today to allow discussing
“eligibility criteria” with the EC and qualifying as “project opportunity”
for EIB
 The 4 categories (GI, PES, BO, PBB) are covered and more than half
have Climate Adaptation (CA) components.
 There are interests from 1 private equity and 1 financial intermediary, the
rest being for direct loans to project or public body or company/vehicle.
 Countries covered: CY/MT, ES, FI, FR, IE, NL, PL, PT, RO, UK.
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 Half of the interests are to undertaking a GI project often linked with CA
components
 Almost all proposals comprise at least 2 categories; those with PBB
features are more “readable”
 There is no proposal led primarily by PES features today ; PES are
underneath GI and/or PBB and/or CA; BO proposals are the less
elaborated to date.
 Most of the business models are not yet clear yet about the “practical”
activation of cash flows and above all on the identity of the recipients /
counterparts of NCFF loans or investments.
 Promoters are regional authorities, public entities, conservation NGOs,
financial intermediaries (FI), public or private utilities, private
corporations
 Apart from the promoters, special vehicles grouping various
stakeholders and SMEs/small legal entities funded by FIs are evoked as
final recipients
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Eligibility Criteria
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Reminder from earlier presentations:
 “The primary objective of the NCFF is to develop a pipeline of projects in EU-28,
testing different financing options in order to identify the most suitable approach.
The overall objective is to provide a proof of concept demonstrating to the market,
financiers and investors, the attractiveness of such operations, thereby
developing a sustainable flow of capital from the private sector towards the
financing natural capital and achieving scale.”

EU Biodiversity Strategy targets; LIFE Regulation ; EU value-added
 Business Context:
(i)
Clear regulatory environment
(ii) Existence of market for project’s bankability
(iii) Sound and efficient business model
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In order to achieve 9-12 operations for 2015-2017 (± 3-4 projects per
year), we should also keep in mind the parameters set-up for the NCFF
portfolio and presented earlier:
 Target NCFF investments / loans per project: EUR 5-15m – Maximum
EUR 15m
 Maximum support facility per project : EUR 1m
 Maximum per MS : 20% (limited to 15% for a single direct and 15% for
total intermediated operations)
 No more than 35% in any one of the 4 categories
 Target term: 10 year with possibility of grace period of 3 year
 Maximum NCFF contribution to total project costs: 75%
 Maximum NCFF participation per private equity fund : 33%
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Assessment criteria
Anne Theo Seinen, DG ENV.B.2
Brussels, 8/05/2015
Objectives of the LIFE Regulation
• Projects to respond as good as possible both to
Nature / biodiversity and climate adaptation
objectives
• Aim is to have high quality projects. Many criteria
and aspects, but altogether the scope for projects
remains very broad
Art. 11 of the LIFE Regulation
• Specific objectives for Nature and Biodiversity
refer to:
• - EU Biodiversity Strategy to 2020
• - Habitats and Birds Directives, including the Natura 2000
network
Contribution to the LIFE Objectives
• Projects must pursue one of the following two
objectives as the primary objective:
•
promote the conservation, restoration, management
and enhancement of ecosystems including through
ecosystem-based solutions applied to the sectors of land,
soil, forestry, agriculture, aquaculture, water and waste;
and/or
•
promote ecosystem-based approaches that enable
businesses and communities to address identified risks
associated with current and projected impacts of climate
change, including through urban, rural, and coastal green
infrastructure projects;"
LIFE Nature and biodiversity (1)
• Checks:
•
are the targeted species and habitats listed in the
annex I to the Birds Directive or annex I or II to the
Habitats Directive? (Exceptions for Annex IV species are
possible)
•
other species/habitats relevant under biodiversity
considerations?
LIFE Nature and biodiversity (2)
•
how does the project contribute to "halting the loss of
biodiversity and the degradation of ecosystem services in
the EU by 2020 and restoring them in so far as feasible,
while stepping up the EU contribution to averting global
biodiversity loss"? Six targets:
1. Fully implement EU nature legislation
2. Better protect and restore ecosystems and their services, and
greater use of green infrastructure
3. More sustainable agriculture and forestry
4. Better management of EU fish stocks and more sustainable
fisheries
5. Tighter controls on Invasive Alien Species
6. A greater EU contribution to averting global biodiversity loss
LIFE Nature and biodiversity (3)
•
share of concrete conservation actions, i.e. actions that
directly improve/slow/halt/reverse the decline of the
conservation status / ecological condition of the species,
habitats, ecosystems or ecosystem services targeted.
•
if high share of recurrent activities (e.g. mowing),
check how long-term continuity of the project is ensured
Art. 15 of the LIFE Regulation
• Specific objectives for Climate Change Adaptation
refer to:
• - development and implementation of Union policy on
climate change adaptation, (…) developing, testing and
demonstrating policy or management approaches, best
practices and solutions for climate change adaptation,
including, where appropriate, ecosystem-based
approaches;
• - improve the knowledge base, integrated approaches
• - development and demonstration of innovative climate
change adaptation technologies, systems, methods and
instruments that are suitable for being replicated,
transferred or mainstreamed
LIFE Climate Change adaptation (1)
• Adaptation means :
•
anticipating the adverse effects of climate change
•
taking appropriate action to prevent or minimise the
damage these adverse effects can cause,
•
taking advantage of opportunities that may arise.
LIFE Climate Change adaptation (2)
• Contribute to a more climate-resilient Europe:
• enhance preparedness and capacity to respond to the impacts
of climate change at local, regional, national and EU levels
• develop a coherent approach
• improve coordination
• Priority to projects that address key cross-sectoral, transregional and/or cross-border issues.
• Encourage:
• projects with demonstration and transferability potential
• green infrastructure and ecosystem-based approaches to
adaptation
• innovative adaptation technologies
LIFE Climate Change adaptation (3)
• Promote adaptation in particular in vulnerable
areas:
• cross-border management of floods
• trans-boundary coastal management, with emphasis on
densely populated deltas and coastal cities
• mainstreaming adaptation into urban land use planning,
building layouts and natural resources management
• mountain and island areas, with emphasis on sustainable and
resilient agriculture, forestry and tourism
• sustainable management of water
• combating desertification and forest fires in drought-prone
areas
Other aspects (1)
•
no double funding, but NCFF could be complementary
to other instruments
• E.g. synergies with integrated projects under the LIFE
Programme
•
concept of 'ecosystems' concerns in the first place wild
flora and fauna, but goes beyond, and domesticated or
cultivated species/varieties and artificial landscapes may
play a role. E.g.:
• Not: apiculture for pollination agricultural/horticultural crops
• Rather: protection of (habitats of) wild pollinators
• green infrastructure: a strategically planned network of high
quality natural and semi-natural areas with other
environmental features, which is designed and managed to
deliver a wide range of ecosystem services and protect
biodiversity in both rural and urban settings.
Other aspects (2)
•
incentive effect: projects that have already started are
not eligible, as the NCFF support would not be necessary
for realising the project
•
multi-purpose delivery mechanism, integration in other
policies, synergies
Demonstration effect, replicability,
transferability (1)
•
projects need to have elements/aspects that have
demonstration value and can be replicated elsewhere
•
"strategy including tasks to multiply the impact of the
projects' solutions and mobilise a wider uptake, reaching a
critical mass during the project and/or in a short and
medium term perspective after the end of the project"
• Current NCFF is a pilot. Need 'proof of concept' (including the
financial set-up).
• NCFF is not to be used for concepts that have already been
proven – there should be something new/innovative. What
makes the proposed project different from similar existing
projects?
• How big is the scope for replication? How many
times/places/etc?
Demonstration effect, replicability,
transferability (2)
• Go beyond simple transfer of knowledge and networking.
Putting techniques, methods or strategies developed or applied
in the project into practice elsewhere
• Check: monitoring, assessment and evaluation measures
• Check: communication, experience-sharing, networking and
dissemination activities
Leverage effect, own financing,
employment creation
•
the higher the contribution by the project owner the
better
•
the higher the contribution by financial intermediaries,
the better
•
the more jobs created, the better
Furthermore:
•
•
•
•
•
long-term sustainability
keep carbon footprint as low as possible
green procurement
reporting, indicators
visibility of support from the LIFE Programme
Eligibility Criteria for the Support Facility
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 The support and capacity building to be financed under the
support facility will be defined for each of the selected operation
with the following objectives:
-
Ascertaining the feasibility of the operation considered for
financing under the NCFF;
Developing the capacity of the final recipient to develop
projects that are technically, commercially and financially sustainable;
Guaranteeing the correct reporting and monitoring of the
impacts on biodiversity, ecosystems and climate change adaptation of
the underlying investments.
 Stage of considering to adjoin and determine the purposes of a
support facility financing will depend on each project.
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Eligibility & Assessment of the Recipients
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
The recipients of the NCFF must be legal entities registered in the
EU.
They may be:
(i) public bodies – referring to national public authorities, regardless of their form of
organisation whether central, regional or local structure, or the various bodies under their
control, provided they operate on behalf of and under the responsibility of the national
public authority concerned,
(ii) private commercial organisations, and
(iii) private non-commercial organisations (including NGOs);

Quality of the Counterparts:

Operating structure: Governance ? Co-investors ? Transparency ? Reporting ?
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Capacity ? Experience ? Allocated resources?
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No special formalities but start with promoters posting relevant and sufficient
information to [email protected] in order to allow EIB assessing
whether the project adheres to NCFF objectives, eligibility criteria and
alignment with various allocation constraints. Then:
 If positively screened, EIB submits to DG ENV and DG CLIMA for
confirmation of eligibility;
 If confirmed, EIB engages discussion (eventually with demand for
additional documents) with the promoter to request pre-appraisal
opinion from comprehensive internal EIB team;
 If positive, due diligence (DD) is launched and project is posted on EIB
website; DD comprises DD questionnaire, desk visits and eventually
site visits;
 If DD positively concluded, the project is submitted for the EIB
Management Committee then Board’s approvals;
 After these approvals, negotiations of finance contracts begin.
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Thank You
Structured Transactions & Fund Investments,
Climate Change and Environment
Enrico CANU
[email protected]
Katarina MALMNÄS
[email protected]
James RANAIVOSON
[email protected]
More info on: http://www.eib.org/products/blending/ncff/index.htm
Contact: [email protected]
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Natural Capital Financing Facility
Information event with introduction workshop
Q&A
Brussels, 8/05/2015