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European Fund for Strategic Investments released

2015-07-23: The EU has released its new investment fund comprising 315 Billion Euros. Investments in the strategic infrastructure including digital, transport and energy, in education research and innovation and in environmentally sustainable projects should be driven forward. About a quarter of the capital is disposed for smaller businesses and midcaps by the EFSI. Besides generating an additional European value it is primarily about stimulating economic growth. Almost any business will be able to submit projects. Projects with higher immanent risk should be promoted by giving a guarantee because economic growth in developed countries can mainly be stimulated by innovation and new developments. Precisly those are the areas where a credit crunch is imminent due to an increased risk aversion of commercial credit institutions. An investment from the private sector being as high as possible is an important prerequisite. EU investment in 2013 was still some 15% below the pre-crises peak in 2007 says EU vice comissioner Jyrki Katainen.

The EIB (European Investment Bank) wants to give credits in the amount of 63 Bio. Euros. This should in turn trigger private investments in the amount of 252 Bio. Euro by shares and liabilities. We will foster guarantees and credits in favour of direct promotions says the chief of the EIB, Werner Hoyer. We do already have a promising pipeline of projects. Projects already running like renovating private buildings to gain a higher energy efficiency (France: 400 Mio. Euro), a pipeline project in Spain (160 Mio Euro), projects for renewable energy (Germany: 150 Mio. Euro) or equipping British households with intilligent electric meters * (480 Mio. Euro) will be continued. Three years ago 10 Bio. Euro have triggered projects in the amount of 180 Bio. Euro. This time the EFSI counts with a leverage of 1:15. The European Commission guarantees that the projects will be selected without political influence.

Germany, France, Italy and Poland contribute with 8 Bio. Euro, Great Britain with 9 Bio. and Spain a.o. with 1.5 Bio. Euro. Although there is no ex-ante allocation of capital due to geographic or political criteria the contributions do roughly flow in similar amounts into the mentioned member states. The investment plan commonly having put Jean-Claude Junckers name on its map has also been designed in lead of EU vice commissioner Jyrki Katainen and the chief of the EIB Werner Hoyer.

P.S.: As far as the European Union and its member states want to honestly join the UN Climate Conference in December in Paris they will neeed to omit any new projects with relation to fossile energy sources or energy intense industry sectors at least until then because complying with the already agreed and direly necessary two degrees goal will as far as now require a rather radical change in basic economic conditions concerning almost all sectors of the economy. All of it would need to be considered in advance with regards to the planned time frame of investments. Besides this a massive expansion of renewable energies would be necessary (Exactly the same way as Juncker had planned it for nuclear power in the beginning amounting to one thrid of all investments.).

  1. European Investment Bank: Investment Plan for Europe
  2. Wirtschafts Blatt (Austrian Daily Newspaper about the Economy and Finance) on 2015-07-23.

* Intelligent electric meters should due to first tests in Germany be considered two-edged since the collected data is basically of private nature but does not stay at the location where it was generated. Data about usage patterns are interesting for the economy. However from a climate political stance the additional value currently leaves a lot to be desired. As long as the only thing the end user can learn from this is that he or she should dry their clothes outdoors instead of using a laundry dryer then it does not pay off. Other measures for saving electric energy like avoiding too many devices running in standby mode by an electric edge connector either with manual on/off button or an automatic master/slave relais do not require that everybody has an intelligent electric meter.

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