In his political guidelines, Jean-Claude Juncker, president of the European Commission, ranked as first priority the need of strengthening Europe’s economy. On 15th July 2014, he announced the launch of an investment package, later named as the European Fund for Strategic Investment, aimed at spurring EU competitiveness and stimulating investments for the purpose of job creation.
Slightly more than one year after, EFSI is ready to become fully operative. Three positive features characterize the Fund. Firstly, it uses public resources as first loss guarantee to crowd in public investors. Secondly, the Fund includes an additionality clause, which aims to canalize financial resources towards underestimated projects able to create sustainable growth, such as those in the clean energy field. Finally, EFSI isolates the Investment Committee from the influence of powerful member states by forbidding the latter from appointing EFSI staff.
Nevertheless, much scepticism surrounds EFSI’s ability to spur economic growth, particularly in the clean energy sector. The Fund fails in creating a stable and unique regulatory framework throughout the Union.
Furthermore, it falls short in addressing the shortage in public investment that characterizes the entire EU.
Most importantly, it does not drive investments towards those sectors, such as the clean energy field, capable of ensuring economic growth and jobs creation without obstructing the achievement of 2020 and 2030 EU goals.
These shortcomings demonstrate why the Fund is not enough to address short- and long- term investment necessities of the green energy sector and the EU in general. The Union must focus on solving those structural weaknesses behind its economic structure and, in particular, behind the structure of the clean energy field.
In order to do so, besides fresh and targeted public investments, a unique and stable regulatory framework throughout Europe is urgently needed to revamp renewables and energy efficiency projects. Through this strategy, the EU could boost the economic recovery of the Union and its green energy sector.
Additionally, driving funds towards this field could help the Union fulfil its 2020 and 2030 goals, while reinforcing its commitment for achieving international climate and clean energy deals.
This article is an excerpt from ICCG Reflection: “The European Fund for Strategic Investment: A Missed Opportunity for the Clean Energy Sector”. Read the full paper here.
(Image: European Parliament Plenary session in Brussels, January 28, 2015. Photo credit: European Parliament/Flickr)