Many innovative projects to slash emissions hit the wall when banks deny them access to venture capital, business representatives warned at a conference organised in Brussels last week (22 October) by the Lisbon Council think-tank.
"With guarantees, for example, a great problem is that banks don't have technical analysis, therefore [they] do not know what we're talking about [and] therefore do not give us a green light for capital," said Neil Turley, managing director of Net Green Developments, a small Portuguese company. "What we have to do in the end ourselves is to turn to a consultancy."
The problem is getting money to SMEs without incurring huge costs, while at the same time ensuring that the projects funded are financially feasible, companies say.
Turley suggested setting up a network of European experts, contracted by the EU, to help SMEs raise money for eco-innovation projects without holding assets. The idea is that a company could email a project proposal to the experts, who would analyse it and issue a guarantee which the company could then take to a bank.
"I do think that there is scope for the public sector in member states to improve the flow of information," agreed Simon Brooks, vice-president of the European Investment Bank (EIB). "It is an area of considerable difficulty because it's all to do with specialist knowledge."
Projects that do not have a "sexy patent" present another problem. Brooks made a distinction between "glamour" areas like wind or solar farms, where it is "rather easy to get credit," and "un-glamour" sectors like energy efficiency and grid investments.
With energy efficiency, the problem is also one of scale, the conference heard. Consequently, energy savings often involve a large number of small individual projects like replacing millions of light bulbs with more efficient ones, but they come under the umbrella of a large programme.
"Finding financing mechanisms to do these scales is quite a challenge," said Brooks. As a result, there are currently hundred-dollar notes lying on the floor that nobody is picking up, because energy-saving projects are often the ones that pay themselves back, he said.
The EIB vice-president argued that the key is to find the right partners to work with, and pointed out that the EU's drive to improve efficiency in cities is heading in the right direction.
"A natural first set of partners for energy efficiency is cities and regions," Brooks argued. "This is because for the same amount of negotiation and arrangement, we have a lot of scale."
