The European Commission is planning to increase its use of de-risking measures to tempt private investment into key projects under the green industrial deal.
Speaking to Parliament on Tuesday, France’s former European minister, Stéphane Séjourné, said “winning the investment battle is all about making sure public investment drives the real economy” and that the EU should do more to leverage private finance.
Séjourné was being questioned by MEPs because he has been chosen by Commission president Ursula von der Leyen to oversee Europe’s industrial policy for the next five years. Parliament will take a vote on his nomination later this month.
If he is approved, a key part of Séjourné’s job will be to work with incoming Commission vice president Teresa Ribera and climate commissioner Wopke Hoekstra to develop a Green Industrial Deal within the first 100 days of the new Commission’s mandate.
The deal will focus on supporting key sectors, including automotives, steel and chemicals, to decarbonise in line with Europe’s climate goals whilst boosting their competitiveness against Chinese rivals.
Séjourné said the next European budget, which will run from 2028 to 2034, will see the establishment of an European Competitiveness Fund to help with the objectives.
He said the “funding toolbox” would include equity and guarantees and would be used to support “important projects of common European interest”.
“Derisking will allow us to give these public funds more clout, and we want to boost synergies between public investors and private investors”.
Maria Luís Albuquerque, the commissioner-designate for financial markets, said in her hearing last week that “the magnitude of the challenges ahead […] require that we all come together, bringing public funds and private funds to address the needs of our green, social and digital transitions”.
Earlier this year, the Commission’s advisory group on scaling sustainable finance in low- and middle-income countries urged policymakers to address the EU’s approach to blended finance, through which concessionary finance is used to leverage private capital to encourage investors to allocate money to projects they wouldn’t normally consider.
Currently, such instruments are often defined as structured products, meaning investors have to pay higher capital charges to invest in them.
Members of the group that called for a rethink of the rules include representatives from Nordea, AP2, Allianz and Amundi.
The European Commission is expected to respond to those recommendations next year.
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