The EIB’s role in Financing the Transition to a Circular Economy
Circular economy is gaining wider international traction as a reaction to the growing signals that we are exceeding the sustainability limits to growth set by the boundaries of our planet. Besides its environmental benefits, the circular economy offers tremendous economic potential, which businesses have started tapping into. The finance industry has recognized the opportunities as well and many banks are already looking into ways to iron out the financing challenges involved. While market forces alone could create a circular economy, there is a risk of a slow transition and high opportunity costs.
In this situation, the European Commission and the European Investment Bank have joined forces to accelerate the transition. Through the establishment of InnovFin and EFSI and other risk sharing vehicles, the EIB is already playing an important role in bridging existing financing gaps and catalysing investments into innovation and the circular economy. Moreover, with the Commission’s support, the Bank has reinforced its specialized advisory services to assist project promoters, both public and private, to overcome some of the challenges that are holding them back from bringing sound projects to the market. Fully aware of the multi-lateral and systemic approach required to meet the impending challenges, the EIB is in continuous discussions with the Commission and other stakeholders to find ways to improve the effectiveness of its financial instruments and advisory capacities.
Werner Schmidt is Director of the Environmental and Sustainable Territorial Development Department (ETD) within the EIB’s Projects Directorate. The Department is responsible for the techno-economic appraisal of investment projects in the following sectors: water management, agribusiness and rural development, urban development and solid waste management and regional development. His department concentrates significant technical expertise on circular economy and bio-economy projects.
Werner Schmidt is an agricultural engineer and economist, who has been working on project, policy and sector advisory work for more than 25 years. Prior to joining the EIB he worked inter alia for the World Bank, the European Commission and the German bilateral technical assistance organization.