It is the first time a European Union member state has entered into such a partnership for climate finance with the EIB.
Under the arrangement, the Luxembourg government will make available €30m of funding over the next three years for investment vehicles based in Luxembourg, financing high-impact climate projects both inside and outside the EU. Under the scheme, the EIB will be able to co-invest in projects, along with third parties.
Funding will be prioritised for projects that offer the highest return of environmental and developmental benefits, and that have the potential to attract additional finance.
The platform will contribute to the implementation of the Paris Agreement through unlocking private sector finance, and coincides with the climate strategies of the Luxembourg government and the EIB.
The agreement signed at the end of last year at the COP21 event, involves a binding commitment on all 195 signatories to reduce emissions and halt global warming.
According to a joint statement, “the EIB will apply its long standing experience and its rigorous assessment for the identification of potential projects under the platform and will cooperate with the Luxembourg government to select suitable projects.”
A memorandum of understanding confirming the collaboration was signed at a ceremony yesterday. The event was attended by Pierre Gramenga, Luxembourg finance minister, and Werner Hoyer, EIB president, among others.
Hoyer said that Luxembourg was paving the way for countries to innovate financing climate action. He said the platform “sets a stimulating example on how best to use scarce public funds in order to mobilise public and private finance for high impact climate action projects”.
It is widely accepted that climate risks undermine efforts to fight poverty and drive economic growth across the globe. Large amounts of capital is required, along with increased capacity to deploy this capital.
Granegna said: “The Paris Agreement highlighted the need for a significant contribution from the private sector in order to achieve the yearly $100bn by 2020. This is precisely what we aim to do with the Luxembourg-EIB climate finance platform.”
He added that the platform would also help to establish Luxembourg as a green finance centre.
