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31/07/2016

Dieselgate: EIB freezes new loans to Volkswagen

Transport

Dieselgate: EIB freezes new loans to Volkswagen

Werner Hoyer said that a €400 million loan to the car maker could have been used to disguise the cheating devices with fabric.

[World Bank]

The European Investment Bank (EIB) has decided to put “on hold” any new loan to Volkswagen, after the bank concluded that part of its funds could have been involved in the emission scandal affecting the diesel vehicles.

EIB President Werner Hoyer told reporters on Thursday (14 January) that “we cannot exclude that there is a link” between a €400 million loan the institution made to the car maker in 2009 and the cheating devices. This loan was fully reimbursed in 2014, according to the scheduled plan.

Following months of new disclosures, the scandal, also affecting gasoline-powered engines, and implicating high level VW executives, Hoyer stated that the bank is now “very concerned” about this case.

“In order to be on the safe side, we have decided to put on hold any new loan to Volkswagen,” the German politician said.

Volkswagen received €400 million in 2009, to support the research and development of more efficient car components, and bring them to market. The funds were part of a €3 billion loan freed that year to finance automotive projects, most of them to support ‘green’ technologies.

The EIB has granted loans worth around €4.6 billion to Volkswagen since 1990.

The company has admitted that all models with its 3.0 litre diesel engines since 2009 contained the defeat device to cheat the emission controls.

>>Read: VW scandal threatens case for €16bn diesel tax subsidy

Early in October, a few days after the scandal broke, Hoyer warned that the EIB “could have taken a hit” from the ‘dieselgate’ storm. Therefore, he announced “very thorough investigations” into what Volkswagen used the funds for.

A ‘green’ investment plan

Hoyer spoke before the press to review the operations of the first half year of the European Fund for Strategic Investments (EFSI), the new guarantee scheme at the heart of the EU’s investment plan.

The EIB, which is the EFSI’s managing body, signed 42 projects with big firms and 84 with small and medium sized companies. The total financing provided was €7.5 billion, which mobilised a total investment of €50 billion

According to the EIB information, around half of the projects were related to renewables, energy efficiency, low-carbon initiatives and the environment. Another important part of the funds aimed at supporting digital infrastructure and industrial innovation.

Background

US regulators found that Volkswagen designed software for close to half a million diesel cars that gave false emissions data during the laboratory tests. Automotive experts believe that tests on the road are more difficult to be cheated.

Despite the public pressure, the EU member states reached a deal on new testing rules for cars in October that allows vehicles to carry on emitting more than twice the mandated pollution limits.

>>Read: Member states resist stricter controls on diesel car emissions

Meanwhile, the European Parliament appointed an inquiry committee in December to investigate the emissions scandal. A final report is expected in one year time.