EIB raises £50m for renewable energy investment

The European Investment Bank (EIB) has issued its first green bonds of 2013, raising funds from investors aiming to promote renewable energy projects.

The transaction is valued at approximately £50 million and marks the EIB's continuing presence as one of the largest financiers of projects to tackle climate change.

It's Climate Awareness Bonds raise funds from fixed income investors to support lending for renewable energy and energy efficiency.

Last year, the EIB provided over £11 billion for projects to tackle climate change with the bonds forming an attractive proposition to fixed income investors who also benefit from the security of the bank.

The current issue will mature in six years and was popular with Scandinavian investors who made up 40 per cent of the total. European investors took the same amount with Asian investors taking the remaining 20 per cent.

Proceeds from Climate Awareness Bonds issues are used exclusively to finance renewable energy projects such as wind, hydro, solar and geothermal energy production; and energy efficiency projects such as district heating, co-generation, building insulation, energy loss reduction in transmission and distribution and equipment replacement with energy efficiency gains of 20 per cent or more.

For instance, in 2012 the EIB and the African Development Bank invested €45 million in four onshore wind farms on islands in the Cape Verde archipelago with a rated capacity of 28 MW. It provided €200 million to support afforestation and sustainable forest management in Hungary to reduce the country’s soil erosion risk and help over 6,000 farmers transform their land into strategically planted sustainable forests.

It was also a key financier of the first commercial solar thermal plant in the world, Gemasolar, located in Seville, Spain, providing a loan of €80 million. Located in the province of Seville, southern Spain, this pioneering plant is capable of generating solar energy 24 hours a day without interruption and, with a capacity of 19.9 MW, it can supply electricity to over 27,000 households.

Pending disbursement, the climate bonds’ proceeds are kept in a separate sub-portfolio of EIB’s treasury and are invested in money market instruments.

EIB provides transparency on the Climate Awareness Bonds through its annual reporting and a periodical investor newsletter.