Bankers want Juncker Plan cleared of state aid rules

Jyrki Katainen: "I am delighted." [European Commission]

European Union rules banning state aid to businesses should not apply to guarantees issued to boost investment under the three-year EU investment scheme, some of the key contributors to the plan said yesterday (13 April).

The European Investment Bank (EIB) and the EU’s main national promotional banks, including Germany’s KfW and France’s Caisse des Dépôts, expressed their view in a letter to be addressed to the European Commission.

The letter said public guarantees should be available below market prices to make the investment plan of Commission President Jean-Claude Juncker work, said Franco Bassanini, head of Italy’s promotional bank Cassa Depositi e Prestiti.

“Were these guarantees considered as illegal state aid, we can forget about the Juncker plan,” Bassanini told journalists, arguing that the riskier projects funded with the plan needed favourable treatment or would be shunned by investors.

Jyrki Katainen, the Commissioner in charge of the plan, said yesterday that talks were ongoing to clarify how state aid rules would apply to the Juncker Plan, an investment scheme intended to use leverage to generate €315 billion of investment in Europe over three years.

National promotional banks of Germany, France, Italy, Spain and Luxembourg, have said they would be ready to contribute billions of euros to projects financed by the European Fund for Strategic Investment (EFSI), the vehicle to be set up by the Juncker Plan, but only for projects in their own countries.

The European Commission would have preferred national contributions to go directly into the EFSI’s coffers because that would increase the leverage effect of the fund, which has capital of €21 billion.

But contributions from national promotional banks are still important for the success of the plan, because they will decrease the risk for private actors when they invest in EFSI-sponsored projects, such as airports or broadband networks.

The banks fear that with state guarantees priced at market levels and subject to strict state aid rules, risks for private investors will be too high, reducing the appetite for investments.

President of the European Commission Jean-Claude Juncker announced an investment plan to mobilise €315 billion in an effort to kick-start the European economy.

Jyrki Katainen, the Commissioner for Jobs, Growth, Investment and Competitiveness, has said that the growth package should include public and private partnerships, increased lending capacity for the EIB and other EU lending bodies, more “future investment” by EU nations in areas such as infrastructure and the completion of the single market.

The Energy Union will cut across a number of policy sectors including energy, transport, research and innovation, foreign policy, regional and neighbourhood policy, trade and agriculture, according to the EU executive's plans. Plans for the Union have developed beyond questions of security of supply to encompass issues such as fighting climate change.

>>Read: Special Report: An Efficient Energy Union

The Renovate Europe campaign says that, thanks to modern technology, buildings' energy demands can be cut by 80%. But, it adds, in order for that to happen, there needs to be an effective regulatory and legislative framework in place.

Campaigners and policymakers agree that energy efficiency through the renovation of buildings has great potential for reducing emissions, spurring the economy, and bolstering energy security.

>>Read: Special Report: Renovate for Energy Efficiency

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