The EIB enables strategic investment, and not just for Europe

At the beginning of 2022, the European Investment Bank formally set up a new development arm: EIB Global. Building on the Bank’s long experience of financing projects outside the European Union, the new arm brings together all the resources of the EIB to catalyse development finance, foster strong partnerships within Team Europe, and – above all – to deliver life-changing impacts for people around the globe.

EIB Global has been created in recognition of the fact that the greatest challenges we face today are, indeed, global. There was a time when development was seen as really just a problem for the global South, as something separate from the challenges to be addressed in the North, but such a view is no longer tenable (if it ever was!).

Climate change is an example of an inherently global issue. It is clear that it makes no sense to act on it in Europe, in isolation, without working to ensure that a path of sustainable, climate-neutral development is attainable for everyone around the globe.

Similarly, the COVID-19 pandemic and it’s economic ramifications have rammed home the message that the well-being of all of us ultimately depends on addressing the needs of everyone, whether in terms of health systems, economic opportunities and infrastructure, or the development and spread of new technologies around the globe.

Innovation, the climate transition and development go hand-in-hand. To tackle climate change, massive investment in green technologies is required, both to develop new technologies and to roll them out across businesses, households and infrastructure, across the globe. As the EU Climate Bank, the EIB is actively contributing with its financing to the implementation of the Paris Climate Agreement worldwide. Our experience at the cutting edge of climate finance, funding green innovation and transformation in Europe is a strength that we bring to green development finance outside the EU. And in turn, our global climate activity informs and enriches our work in Europe.

The EU’s role as a trailblazer in green transition are important to accelerate the region’s own shift to a low carbon pathway. But these efforts are also crucial to enable global green transition.

The resources that European innovators devote to the development and deployment of low carbon technologies at home help to de-risk and reduce the cost of critical solutions ahead of their global deployment.

Examples of such technologies include green hydrogen, efficient high-capacity batteries for electric mobility and energy systems, the electrification of heat and power in industry, green steel, and sustainable circular models for other resource- and energy-intensive industries. Once these low-carbon energy, transport and industry technologies are technically proven and commercially viable at scale, prospects are also much improved for their accelerated global deployment.

The latter is key to limit global temperature rise to 1.5 degrees Celsius, as we have set ourselves as a target, and it is important to ensure sufficient access to green energy for the EU economy going forward. With demand for green energy expected to increase by a factor of 4-5 in the EU over the coming years, it will be critical that Europe, in addition to investing massively in the role-out of clean technologies at home, builds partnerships which will give it access also to some of the enormous wind and solar potential available outside of its borders.

Just as we are all linked by one global ecosystem, it should be clear that the economies of the world are interdependent, and even that our public health situation can depend on the quality of healthcare available on the other side of the planet: the COVID-19 pandemic has made this all too clear!

Indeed, this pandemic has proven to be far more that a health crisis; it is having far-reaching effects on the economies and societies of countries all around the world. Whether we look at the loss of education or the impacts on businesses, jobs and the flow of finance for development, it is clear that the risks are still significant and that the scars left by the pandemic will take some time to heal.

In advanced economies, we have been able to use fiscal policy at a very large scale to cushion the economic shock caused by the pandemic and prevent widespread job losses and firm failures. This worked by supporting incomes and thus maintaining consumer demand. It has meant that as restrictions on activity have been lifted, there has been a rapid rebound in consumer activity that has also helped businesses to recover quickly. This is the good news.

But these massive interventions in the national economy have done little to address the supply disruptions caused by COVID-19 and containment measures around the world, disruptions that have been exacerbated by the slow deployment of vaccines in many countries.

The result has been some dramatic disruptions feeding their way along global value chains. These have held back production and the recovery also in developed economies. By one estimate, the cost to the global economy from these supply disruptions could be in the range of one to six trillion dollars, with up to one half of that loss borne by developed economies. While the goal of saving lives and preventing millions from being pushed into poverty should clearly be motivation enough, we can also see that the economic rate of return from fighting the pandemic and investing in the deployment of vaccines worldwide is tremendous.

This makes EU backing for development finance more important than ever, with the fight against the spread of COVID-19 an urgent priority. This requires global cooperation and solidarity, particularly on vaccines.

The EIB plays an important role in financing biotech research and was a proud backer of BioNTech’s work before the pandemic. With the help of the European Commission and the COVAX Facility, we are also supporting the deployment of vaccines against COVID-19 in 92 middle and low-income countries.

And we also recognize that fighting this pandemic – and our resilience to future ones – requires investments in health research, healthcare systems and the whole logistic and manufacturing value chain that links them.

We have helped finance the reconstruction of the national Health laboratory in Rwanda, for example, to transform diagnosis, surveillance and research capabilities, while our pharmaceutical investment initiative is helping to scale-up local production of active pharmaceutical ingredients, to strengthen supply chains and reduce import dependency.

Another priority is to actively support microenterprises and small businesses, to help them weather the effects of the pandemic. This is what we have been doing. After the pandemic struck in 2020, we increased our annual lending in support of microenterprises and SMEs outside the EU by 83%, to €4.2 billion, while sustaining our support for investment in vital social and economic infrastructure.

The interconnectedness of the global economy is one reason why the EU has launched the Global Gateway initiative. The partner countries of the EU have major and urgent financing needs to develop their climate, energy, transport and digital infrastructure, and to strengthen their health and education systems.

They need a trusted partner to design projects that are sustainable and of high quality, and implemented with high levels of transparency and standards in order to deliver lasting social and economic benefits for local communities, EIB Global will be a key partner in the implementation of Global Gateways, helping to build sustainable infrastructure with the support, skills and the finance needed to operate it, without creating dependencies, and with the fair and favourable terms needed in order to limit the risk of debt distress. As a stronger platform for partnership and strengthened presence in host countries, our new branch is ready to work with national authorities, other financial institutions and the private sector to scale up infrastructure investment. It will do this to deliver real positive benefits for our partners, boosting our economic links, empowering local communities and tackling today’s most pressing global challenges-from climate change and sustainable development to health security, gender equality and education – and it will do so by building on the Bank’s decades-long experience in this field.