EIB | The EIB Energy Lending Policy: Independent Evaluations Insights

The evaluation insights is a streamlined accelerated assessment of the EIB’s Energy Lending Policy undertaken to inform the new EIB Group Energy Sector Orientation. The evaluation found that the Policy offered a solid, yet flexible framework aligned with EU clean energy transition goals and marked a pioneering shift away from unabated fossil fuels. The Policy’s adaptability enabled swift support for the REPowerEU Plan and a significant scale-up in EIB’s clean energy investments. EIB lending focused on mature technologies and large existing clients, while support for innovation and new entrants remained more limited. Lessons, which were built in the new Energy Sector Orientation, include preserving flexibility, considering a comprehensive approach to support across energy value chains, and setting intermediate objectives to better demonstrate and communicate on the EIB contribution to EU’s high-level objectives.

Executive Summary

Context

The EIB Energy Lending Policy (2019) marked a major shift in the Bank’s support for energy, making it a cornerstone of its overall climate ambition.  Setting a precedent among international finance institutions, the policy formalised the EIB Group’s decision to phase out support for  nergy projects reliant on unabated fossil fuels. It outlined the EIB’s approach to advancing EU energy objectives.

The evaluation insights conducted by the EIB Group’s Evaluation function is an accelerated assessment of the Energy Lending Policy. It is designed  o draw lessons from the Bank’s support for the EU energy transition and provide timely inputs to inform the upcoming Energy Sector Orientation, due to be approved in late 2025.

Key findings

I. The Energy Lending Policy provided a solid yet sufficiently flexible framework, reflecting the EIB’s strong commitment to the EU energy transition.

The framework set by the Energy Lending Policy is closely aligned with EU policy and served the EIB’s vision well. It reflects the EU vision for  climate neutrality and supports the priorities of the European Green Deal, so that Europe can deliver on its climate and energy targets for 2030. The policy also laid the groundwork for the EIB Group Climate Bank Roadmap, which set out the Group’s climate ambitions for 2021-2025.

The policy provided a clear framework, yet it did not fully capture the breadth of EIB energy-related activities. The policy provided a solid strategic framework – including eligibility criteria – to structure EIB energy operations. Nonetheless, some energy investments, for example those related to research, development of new energy technologies and the manufacturing of batteries, fall outside the scope of the policy. This limits its ability to
provide a comprehensive view of the EIB’s energy-related portfolio and to ensure consistent reporting on investments across the energy value chain.

The Energy Lending Policy provided the EIB with sufficient flexibility to adapt to a rapidly changing context. The policy enabled the Bank to respond to the energy crisis triggered by Russia’s full-scale invasion of Ukraine, notably by supporting the European Union’s REPowerEU plan1 and scaling up investments in clean energy and infrastructure. While its objectives remain relevant, other EU priorities have gained prominence.

The EIB’s energy lending is aligned with current EU policy priorities, such as competitiveness, energy affordability, energy security and resilience, but demonstrating how it contributes to these objectives is methodologically complex. This is due to the many external factors beyond the Bank’s control, such as geopolitical developments and global energy market dynamics. Defining measurable intermediate objectives2 to which EIB operations can contribute – and which the Bank can effectively communicate and report on – would help to address the issue.

II. The EIB significantly increased and accelerated energy lending, responding to substantial investment needs in the European Union.

Leveraging its experience and client base, the EIB significantly scaled up its lending for the EU energy transition. Under the Energy Lending Policy, the EIB has become a key financier of the European green transition. This surge in energy lending reflects substantial investment needs. It was driven by the ambitions set by the EIB Group Climate Bank Roadmap and REPowerEU packages, which led to significant business development  efforts to boost the delivery of EIB investments.

EIB support to decarbonise the energy supply has predominantly focused on mature technologies, such as solar photovoltaic and wind power, crucial for the energy transition. The Bank’s energy portfolio under the Energy Lending Policy has remained stable since 2019, with a strong focus on solar photovoltaics and onshore and offshore wind. Despite policy ambitions, market uncertainties limited investments in green hydrogen and carbon capture and storage. The Bank’s drive to achieve high climate action-related lending volumes, reduce time to market and manage risk contributed to its focus on large operations in mature sectors over investments in new and less mature technologies.

The EIB supported enabling energy infrastructure by investing in transmission and distribution networks, with a strong focus on electricity grids.  EIB lending in enabling energy infrastructure was highly concentrated in a few EU countries and with large operators. The EIB has in some instances extended its exposure limits with large clients, reflecting the structural concentration of grid operators in some countries.

The EIB supported emerging technologies – such as floating offshore wind – albeit modestly due to limited market opportunities and its focus on  large operations. These investments involve trade-offs, such as limited scalability, longer time to market and higher risk. Their contribution to energy lending is difficult to quantify as these investments are often categorised under the theme “supporting innovative technologies and new types of energy” or the “innovation, digital and human capital” public policy goal.

III. The EIB’s financial product and advisory services offer was well suited to its existing client base.

The EIB’s standard toolkit has proven fit for purpose to support the Bank’s energy lending due to its focus on existing clients. The Bank’s energy lending has to a large extent relied on investment loans and framework loans. To broaden its reach, the Bank also used other instruments, notably intermediated lending for small and medium-sized enterprises (SMEs), guarantee products and venture debt. Despite this range of products and the broad eligibility criteria, financing digitalisation and manufacturing remained challenging. Digital investments tend to have shorter economic lifespans that constrain the EIB’s ability to offer long-term financing.

Manufacturing generally fell outside the EIB’s direct eligibility scope – with exceptions for innovative production – until REPowerEU temporarily broadened the eligibility criteria.

Demand for project-related advisory support remained limited due to the Bank’s focus on large and experienced clients. Most clients receiving EIB energy financing were already familiar with the Bank’s procedures and had a solid track record in their industries. They thus rarely needed advisory support from the Bank. Reaching new, smaller and/or less experienced clients may require more extensive advisory engagement.

Lessons

The evaluation insights point to three lessons for the upcoming EIB Group Energy Sector Orientation:
1. Preserve flexibility in the Energy Sector Orientation by (i) setting broad eligibility criteria that enable the Bank to support the energy transition and stay the course on its climate and environmental ambitions; and (ii) providing technical guidance separately.
2. Consider a comprehensive EIB support for energy value chains by investing strategically in key elements of energy value chains to allow a comprehensive, well-structured response that addresses market gaps and advances EU strategic priorities.
3. Ensure the Energy Sector Orientation can be operationalised by (i) setting a framework that enables the Bank to provide a complete overview of its support for the energy transition; and (ii) defining measurable intermediate objectives for EIB investments to enhance reporting and effectively  communicate the EIB’s full contribution to high-level EU policy objectives.

Read the full policy document HERE.

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