European Investment Bank Research Articles

Adapting to climate change and the European Union pursuit of a just transition

The European Green Deal was launched by the European Commission (EC) in December 2019, before being formally approved in 2020. It comprises a package of policy measures that aim to set the European Union (EU) on the path to a green transition, with the ultimate objective of achieving climate neutrality by 2050. Despite the EU’s longstanding commitment to reducing carbon emissions in support of climate change mitigation and the achievement of its net zero ambition, this paper focuses on the growing importance of climate change adaptation within its policy portfolio. With respect to the latter, the long-term vision is for the EU to become a climate-resilient society that is also fully adapted to the unavoidable impacts of climate change. Achieving climate neutrality and a climate-resilient society by 2050 will be more challenging for some EU member states and regions than for others, eg poorer regions and those highly dependent on fossil fuels or with carbon-intensive industries that employ significant numbers of people. To address such issues, the EU has introduced a Just Transition Mechanism to help level the playing field and provide financial and technical support to regions most adversely affected by the move towards a low carbon economy. The paper traces the evolution of the EU’s climate policy agenda leading up to the adoption of the Green Deal, outlines its proposed road map in pursuit of climate neutrality and a climate-resilient society by 2050, and questions the efficacy of some its intermediate targets including the adequacy and equity of its just transition aspirations. It also details and scrutinises the key role that the European Investment Bank (EIB) will play in supporting delivery of the strategy.1,2

Adapting to climate change and the European Union pursuit of a just transition

The European Green Deal was launched by the European Commission (EC) in December 2019, before being formally approved in 2020. It comprises a package of policy measures that aim to set the European Union (EU) on the path to a green transition, with the ultimate objective of achieving climate neutrality by 2050. Despite the EU’s longstanding commitment to reducing carbon emissions in support of climate change mitigation and the achievement of its net zero ambition, this paper focuses on the growing importance of climate change adaptation within its policy portfolio. With respect to the latter, the long-term vision is for the EU to become a climate-resilient society that is also fully adapted to the unavoidable impacts of climate change. Achieving climate neutrality and a climate-resilient society by 2050 will be more challenging for some EU member states and regions than for others, eg poorer regions and those highly dependent on fossil fuels or with carbon-intensive industries that employ significant numbers of people. To address such issues, the EU has introduced a Just Transition Mechanism to help level the playing field and provide financial and technical support to regions most adversely affected by the move towards a low carbon economy. The paper traces the evolution of the EU’s climate policy agenda leading up to the adoption of the Green Deal, outlines its proposed road map in pursuit of climate neutrality and a climate-resilient society by 2050, and questions the efficacy of some its intermediate targets including the adequacy and equity of its just transition aspirations. It also details and scrutinises the key role that the European Investment Bank (EIB) will play in supporting delivery of the strategy.1,2

Comparative Perceptions Influence Actions on Climate Change Between Eastern and Western Europeans

Climate change is an important issue that countries worldwide are aware of and campaign to reduce. All parties must cooperate, whether the government, the private sector, individuals, etc. Many perception surveys have met the public's understanding and knowledge about climate change. Despite the odds, previous research supported environmental protection and sustainability in surveys, polls, and past research. However, the existing literary gap between intentions and actions and awareness and implementation has recently widened. The objectives of this research include comparing perceptions and climate change mitigation actions between Eastern and Western European countries because both regions are different, as well as searching for and comparing perceptions influencing climate change mitigation actions between them. The research adopts a quantitative methodology, emphasizing exploring secondary data from the European Investment Bank (EIB) climate change survey 2022–2023. It analyzed the data to compare the perceptions and actions of the two regions in mitigating climate change. The statistical tests included a t-test and stepwise multiple regression analysis to predict the influence of perceptions and actions on reducing climate change. The results showed that respondents' perceptions of climate change in Eastern and Western Europe were not significantly different. However, there was a significant difference in the number of reduction actions taken by Western Europeans compared to Eastern Europeans. Perceptions of climate change catastrophes and serious government mitigation actions positively influenced actions in Eastern Europe. This study found that businesses' attention to mitigation and their perception of the catastrophic effects of climate change positively influence mitigation actions in Western Europe. The recommendations guided governments, policymakers, and businesses to take action to reduce climate change, motivating people's adequate perceptions and actions. Stakeholders communicating climate change's impacts on catastrophe should present true information with honesty and transparency. Doi: 10.28991/HEF-2024-05-03-03 Full Text: PDF

Digitalisation and high-growth enterprises in Europe

ABSTRACT The profound implications that digital technologies have for business dynamism and the competitive environment have raised the attention of policy makers and scholars. This paper examines the link between digitalisation and firm growth, and investigates whether high-growth enterprises (HGEs) invest and adopt digital technologies differently than non-HGEs. Using the European Investment Bank Investment Survey and Generalised Least Squares as well as random-effects probit models, we find strong complementarities between different digitalisation indicators. Furthermore, firms investing in digitalisation are more likely to exhibit rapid employment, sales and labour productivity growth. Our results also highlight the heterogeneous nature of the digitalisation process and its relationship with firm performance.

Green and global? A policy frame analysis of the European Investment Bank’s re-branding from 2018–2023

ABSTRACT This article examines the European Investment Bank’s (EIB) positioning and response to reforms in the European development financing landscape. These reforms aimed to enhance the role of Development Finance Institutions in promoting external investment, threatening the EIB’s privileged access to EU budgetary resources. The EIB responded by creating “EIB Global” and rebranding as the European climate bank. Through framing analysis, this article studies the EIB’s discourse supporting these reforms. It concludes that in striving for institutional survival, the EIB has unintentionally created a situation in which its development and green finance mandates now compete for attention.

Multilateral financial flows and state–business relations in Morocco

ABSTRACT Political economy explanations of regime resilience often look at domestic support bases and patronage systems. Foreign aid to the state is seen as a direct form of propping up regimes. This article attempts to track the flow of foreign assistance to one part of the domestic support base of a regime, namely the economic elite, thereby making a connection between domestic explanations and foreign support explanations of regime resilience. The core argument of this article is that multilateral financial flows from Western dominated institutions may preserve regimes in the Middle East and North Africa. Multilateral flows from the World Bank Group, the European Investment Bank, and the European Bank for Reconstruction and Development went to regime insiders and thus potentially strengthened existing economic elites during the time in which the former Islamist opposition party led a coalition government. I draw on the linkage dimension of Levitsky and Way’s model to show the importance of specifying the nature and destination of multilateral financial ties with Morocco’s private sector. This contribution helps us link the international dimension to the domestic political economy. It thus potentially adds to our understanding of monarchical regime resilience post-Arab Spring by highlighting how multilateral financial institutions support an important part of the economic elite.

PUBLIC INVESTMENT, ECONOMIC GROWTH AND EFFICIENCY

The definition of public investment is not as clear and precise as it may seem. Often, public investments are described as public expenditures that contribute to the stock of physical capital, encompassing tangible assets such as properties (excluding land), buildings and other structures (e.g., roads, airports, hospitals, schools, telecommunication structures, government buildings, bridges, etc.), machinery, transportation equipment, and intangible assets like intellectual property (OECD, 2016). Therefore, public investment is the allocation of funds that result in the growth of the aforementioned items. Public investment can be viewed as a political tool in the hands of a government, capable of altering or determining the course that a country's economy and other aspects of life will take. Governments utilize public investments to respond to a variety of challenges over time, addressing global issues such as climate change and local problems like periods of economic decline, diverse demographic trends, rapid urbanization, or adaptation to new technologies. As emphasized by the European Investment Bank, "properly functioning infrastructure networks are the backbone of flourishing economies" (European Investment Bank, 2010). Public investments are integral for economic and social prosperity, contributing to the national capital stock by allocating resources to essential basic infrastructure, education, research and development, thereby leading to increased productivity and improved living standards. The aim of this article is to analyze the role of public investments in the economy in addressing contemporary challenges.

КОНЦЕПТУАЛЬНІ ПРОБЛЕМИ ЗМІСТОВНОЇ ІНТЕРПРЕТАЦІЇ ДЕРЖАВНО-ПРИВАТНОГО ПАРТНЕРСТВА

It has been established that there is still no generally accepted and established definition of public-private partnership in both foreign and domestic literature. In some definitions, the conditional uncertainty of the essence of this concept is deliberately embedded. Thus, the European Investment Bank (EIB) defines a public-private partnership as an agreement between an institution representing public authorities and a private partner, intended for the implementation of public infrastructure projects and public services within the framework of a long-term contract. Since this resolution does not record the nature of such agreements, does not indicate the principles of the relationship between the private and public sectors, then the EIB documents focus, first of all, on the fact that the private sector can receive financial benefits in two ways: payments are made by a state body to a private partner based on the diagnosis of the results of service provision (for example, road availability); the private partner is granted the right to receive revenue from the provision of the service (for example, to introduce and collect tolls for the use of roads). The definitions of the World Bank and the Organization for Economic Co-operation and Development (OECD) are similar and emphasize that a public-private partnership is a long-term contract between the public and private sectors in which significant responsibility rests with the private sector in the field of management, as well as the private sector assumes most of the risks in the implementation of this project. The OECD also emphasizes in its definition the fact that the transfer of risk to a private partner largely depends on the effectiveness of such a project, and that the state's goals are aligned with the private sector's profit-maximizing goals. These definitions are quite cumbersome and detailed, but even they have not become universal and able to cover various options and forms of implementation of public-private partnership. The generalization of the existing approaches to the definition of public-private partnership was further developed, with the selection of three main interpretations: broad (implies the inclusion in the content of the concept of public-private partnership, various options for the interaction of the state and the private sector, aimed at solving any tasks in any spheres of social life); narrow interpretation (presupposes that within the framework of a public-private partnership, the state and business are united to implement a specific investment project regarding those objects that belong to the sphere of public interest and control, for example, related to the production and offer of any public good); contractual (related to the dual nature of the concept of public-private partnership, which involves not only its socio-economic essence, but also its legal one. With this interpretation, the public-private partnership is considered as a specific contract, the subject of which is various works on the construction and use of within the framework of this approach, the concept of public-private partnership is filled with various features and essential conditions of this specific contract, and the subject composition of the participants of contractual relations is also determined). Keywords: relations between private and public sectors, public partner, public-private partnership, private partner, project.

EIB policy entrepreneurship and the EU’s regulation of Green Bonds

ABSTRACT This article investigates how the European Investment Bank (EIB) influenced EU policymaking by promoting Green Bonds as an asset class. The article argues that the EIB has been instrumental in formulating the EU’s recently agreed Green Bond Standard. The EIB’s expertise and successful coalition building later allowed it to put Green Bonds on the EU’s policy agenda and develop a blueprint for the EU’s rules. The article concludes by drawing implications about the conditions under which the EIB might be able to engage in policy entrepreneurship more generally.

The European Investment Bank in Sub-Saharan Africa: constrained expansion

ABSTRACT Exploring the European Investment Bank’s (EIB) largely unexplored external operations, this article provides the first comprehensive analysis of the EIB’s activity in Sub-Saharan Africa (SSA) from its inception in 1957 up to 2024. The contribution enriches the discourse on re-aligning the European Financial Architecture for Development, by outlining the EIB’s inter-institutional considerations and its policy implications for both EU and SSA stakeholders. The findings reveal a “constrained expansion”, shaped by a mix of enablers such as EU geopolitical interests and a financialization-centric vision of development, and constraints including the Bank’s risk-aversion and increased competition with other development finance institutions.

Off-balance-sheet policies to the rescue: The role of statistical expertise for European public–private partnerships

Off-balance-sheet policies are an important but understudied phenomenon that emerged from a technical subtlety in the calculation of public debt statistics. Taking the case of an exemplary European off-balance-sheet policy, public–private partnerships (PPPs), this paper analyzes the technocratic processes that allow the emergence of such debt-neutral instruments. In the aftermath of the sovereign debt crisis, off-balance-sheet policies have become an important policy tool for Member States in the European Economic and Monetary Union, enabling them to strike a balance between the perceived ‘public investment gap’ and the mantra of fiscal consolidation. The case study shows how the lack of political solutions to Europe’s investment-consolidation conundrum leaves it to technical experts to find workable solutions within the existing rules. The off-balance-sheet status of PPPs came under threat in 2014 but was reaffirmed through a coordinated effort by two strange bedfellows: the European Investment Bank (EIB), a promoter of PPPs, and Eurostat, the European authority responsible for public debt and deficit indicators. I argue that Eurostat and the EIB have entered into strategic cooperation to increase each other’s room for manoeuvre, diffuse political pressure and avoid bureaucratic overload. This paper contributes to a better understanding of the role of technocrats and their expertise, which shape the mutual relations between fiscal constraints and financialized investment policies in the European investor states.

Overlapping lending by the European Investment Bank and the European Bank for Reconstruction and Development

ABSTRACT One of the main criticisms of contemporary lending practice by different multilateral public banks in Europe made by scholars and policymakers focuses on overlapping loans, which can create duplications and inefficiencies. However, no database exists on the lending overlaps between these banks. With the aim of analysing these overlaps, all lending by the two major multilateral public banks in Europe, the European Investment Bank and the European Bank for Reconstruction and Development, were merged into a single database. This new database allows researchers to assess lending overlap, regarding its size, evolution, and geography, facilitating an inquiry into the extent to which banks coordinate this overlapping lending.

Accountability in pan-European borrowing: mind the gap

The European Union (EU) is now borrowing on the scale of a large state to address challenges ranging from COVID-19 to the war in Ukraine. However, there has been limited comparative research on how pan-European borrowers can and should be held to account. This article offers a normative justification for why such borrowing should be accountable before showing how accountability practices diverge from a set of accountability expectations derived from three baseline theories: liberal intergovernmentalism, sociological institutionalism and historical institutionalism. Through elite interviews and online archival analysis, we show that the vertical accountability of the European Bank for Reconstruction and Development, the European Investment Bank and the European Stability Mechanism to national parliaments in six EU member states varies. Our findings also show that horizontal accountability has been constrained by the European Parliament’s limited involvement in borrowing decisions until recently and that patchy interest from national auditors has undermined diagonal accountability. As EU borrowing increases in importance, these accountability gaps urgently need to be filled.

European funding for research in EV battery materials

The European Investment Bank (EIB) is committed to supporting innovative European manufacturing in strategic net-zero technologies.

The impact of the green economy on the sustainable development of Kazakhstan

The authors in this study noted that, the world economy is faced with the realities of depletion of natural resources, water, and environmental pollution. The global course around the world today is the “green economy”, which provides not only a careful attitude to nature, but also the introduction of innovative technologies. In addition to the high level of physical and moral depreciation of equipment, which worsens the issue of irrational consumption of raw materials and energy, there is also a lack of innovation due to low demand and restricted funding. The current implementation of the Invest EU investment program aims to attract a minimum of 650 billion rubles between 2021 and 2027 in long-term public and private investments to support the sustainable revitalization of the European economy. A significant portion, 30%, of these funds are earmarked for climate-related projects. This presents a unique chance for funding innovative ventures that carry higher financial risks, with the added security of a $26.2 billion euro EU budget guarantee. The Public Sector Loan Facility offers a unique financing option, serving as a credit line to enhance public funding in specific areas. This facility, offered by the European Investment Bank, combines grants from the European Union with loans to support projects in targeted regions. It also extends assistance to projects that may not generate profits. The Center for Green Finance was founded in Kazakhstan in 2018 at the Astana International Financial Center with the aim of advancing and advocating for environmentallyfriendly financial practices.

Investment attractiveness of Ukraine in conditions of prolonged war

The article indicates the impact of investments on the economy of Ukraine and investigates the investment potential in the conditions of a protracted war and the investment attractiveness of Ukraine in the conditions of a prolonged war. The important mechanism for stimulating investment activity, namely state support of the authorities in the form of compensation of a part of the interest rate and provision of state guarantees for loans is considered. Negative factors that significantly affected the process of attracting investments in the development of the economy, namely the development of the country and its economy in the conditions of war, are also presented; lack of protection and state guarantee mechanisms for foreign investments. Nevertheless, the main problems that concern investors when investing in the military economy have been revealed. The article describes why Ukraine remains attractive for investment in the face of a full-scale invasion and its potential in the face of a protracted war. It indicates how to ensure the stable development of investment attractiveness. The platform for potential foreign investors is mentioned, which collects more than 500 investment projects and opportunities in 10 sectors of the economy that have significant investment potential, namely: the defense industry, metallurgy and metal processing, energy, natural resources, agricultural sector, transport infrastructure, manufacturing, woodworking and furniture manufacturing, pharmaceuticals, advanced technologies. It also indicates which sector suffered the least losses from the war and retained 95% of contract volumes. This paper describes what is necessary to ensure the stable development of investment attractiveness. It is stated that Ukraine should reform its economy and improve the business environment by improving the legal system, fighting corruption, ensuring intellectual property rights and promoting entrepreneurship and innovation. Possible ways to attract investments in the conditions of a long-term war are indicated. It analyzes how Ukrainians invest during the war and which investment strategy they choose. It is noted that the agreement with the G7 and the EU on investment guarantees provides for the receipt of long-term and economically beneficial loans from international financial organizations, such as the World Bank, the European Bank for Reconstruction and Development, and the European Investment Bank.

Renewable energy sources as an element of increasing the level of EU energy security: legal aspect

Problem setting. The ever-increasing challenges to the European Union’s energy security, the steady increase in energy demand and the commitment to combat climate change make the promotion of renewable energy sources particularly relevant. The author of the article substantiates the thesis that currently the actualization of the use of ecologically clean energy sources already goes beyond the climatic context and has an economic and geopolitical basis. Analysis of recent researches and publications. In Ukraine and abroad, there is a rather illustrious list of scientists who worked on the study of the peculiarities of the regulation of ecologically oriented energy both in the whole world as a whole and in the EU in particular. They are specialists in international, environmental, climate law and EU law. S. Bilotsky, Ya. Benedyk, Yu. Shemshuchenko, Yu. Kogut, K. Huhta, S. Bruce, E. Grigorovic can be singled out separately. Of course, the given list is not exhaustive and contains only a few examples of scientists actively researching the issue of legal regulation of RES support in the European Union and the world. However, it is the actualization of the issue of expanding the use of RES that determines the need for further scientific research, in particular in the area of ensuring energy security in the EU. Purpose of the research is to study the EU regulatory framework in the field of ecologically oriented energy as an integral component of increasing the overall level of EU energy security in the context of modern geopolitical challenges, as well as its improvement after the start of the full-scale invasion of Ukraine by Russia on February 24, 2022, and the study of the results, which are obtained thanks to such normative transformations. The presentation of the main material of the article will relate to the justification of the need to increase the share of renewable energy sources in the energy use of the EU precisely after the start of a full-scale war between Ukraine and Russia. Article’s main body. The presentation of the main material of the article is primarily devoted to an overview of the modern legal regulation of the introduction of renewable energy sources in the EU, as well as to the justification of the importance and advantages of the transition to RES in the context of the modern geopolitical situation caused by the fullscale invasion of Russia into Ukraine and the main challenges arising in connection with this before the region. The author puts forward the thesis that one of the positive aspects of RES development will be the reduction of dependence on imported energy resources in general, and on Russian ones in particular. The problems of global implementation and mechanisms of RES implementation in the EU are briefly highlighted, emphasizing their positive effects. The author also highlights the list of measures necessary for the energy system to provide the EU member states with energy not from fossil fuels, but from ecologically clean sources that do not pollute the environment and do not affect climate change. The author emphasizes the need for active implementation and support of a policy focused on the development of RES, in order to ensure a sustainable, independent and ecologically clean energy future. Attention is drawn to mechanisms for financing and supporting projects aimed at the development of ecologically clean energy, which will allow the EU to cope with modern challenges in the energy sector. Conclusions and prospects for the development. The EU should focus its efforts on increasing the use of wind energy, solar energy, hydropower, geothermal energy and biomass (including peat) for the production of electricity and fuel, which should be based on the national energy strategies of the member states, taking full account of geographical, geological or climatic features, taking into account differences of each member state. Infrastructural compatibility and the development of innovative technologies in the energy sector should also become a priority of the EU member states. New technologies can help minimize the negative effects of climate change on the safety of citizens, and should also be taken into account in the design and operation of stations and networks that will run on renewable energy sources. In addition, it is necessary to ensure the arrival of significant public and private investments in the research and development of “green” technologies and alternative energy and the development of new capacities, in particular through the European Investment Bank and the European Structural Funds and the stimulation of sufficient investments from private donors.

Os Bancos de Desenvolvimento multilaterais, nacionais e subnacionais: os países emergentes e o financiamento ao desenvolvimento

Development Banks are financial institutions designed to promote socioeconomic development, infrastructure, reduce inequalities and provide working capital to increase the country’s economic activity. Brazil stands out for the presence of three national development banks: (i) National Bank for Economic and Social Development (BNDES); (ii) Bank of the Northeast of Brazil (BNB); and (iii) Bank of the Amazon (BASA). In addition, there are three subnational banks: (i) Minas Gerais Development Bank (BDMG); (ii) Regional Development Bank of the Far South (BRDE), and the Espírito Santo Development Bank S.A. (BANDES). At the international level, two major groups of multilateral development banks are recognized: (i) the traditional banks that were created in the second half of the 20th century, such as the World Bank, the Inter-American Development Bank (IDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB); and (ii) the new multilateral banks, created in the 21st century at the initiative of emerging countries, such as the New Development Bank (NDB) or Bank of the BRICS, the Latin American Development Bank or Andean Development Cooperation (CAF) and the Asian Infrastructure and Investment Bank (AIIB). Emerging countries, either by creating national and subnational banks or by taking the initiative to establish new multilateral banks, represent an important group of states to contribute to increasing of investment availability for development and infrastructure.

The European Investment Bank Complaints Mechanism: Its Potential and Limitations

The European Investment Bank Complaints Mechanism: Its Potential and Limitations

The European Investment Bank to the rescue? COVID-related lending as incremental change

ABSTRACT The European Investment Bank (EIB) was officially part of a coordinated European Union (EU) strategy to address the impact of the COVID-19 pandemic. However, we argue that despite the worst socio-economic crisis to hit most European countries since the Second World War, the EIB failed to deviate from a set path that delimited acceptable forms of lending. We apply a historical institutionalist analysis to explain how and why the EIB continued to engage in principally low risk lending activities via the commercial banking sector, and failed to significantly increase lending to the public health sector.