EU to help cities go ‘green’, buy clean buses

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The European Investment Bank (EIB) is developing a financing facility to help cities improve their energy efficiency and buy cleaner bus fleets. An initial 15 million euro is foreseen to assist cities in developing the projects, but actual financing could reach “billions”, EURACTIV has learnt.

“We have two basic lines of action. One is energy efficiency and the other is public transport,” said Mario Aymerich of the EIB.

“The intention is to use new technologies like hydrogen or hybrid buses to be implemented in cities” using green public procurement rules, the official told a conference in Brussels yesterday (11 February).

Funding will go to projects that can demonstrate their ability to deliver on the EU’s so-called 20-20-20 policy of reducing greenhouse gases by 20% by 2020, and covering 20% of its energy needs with renewables by the same date, he explained.

EIB financing to cover up to 75% of costs

The EIB is currently working with the European Commission to set up a 15 million euro fund to offer cities “technical assistance” in developing projects. The facility has not yet been officially approved, but this should be announced “in the coming days,” Aymerich said.

“Once the projects are there, we can really start talking numbers,” said Nick Antonovics, a spokesperson for the EIB. “We’re talking about projects for big cities,” he added, saying these could reach “billions”.

According to Aymerich, “the new element of this facility is that, instead of financing up to 50% of the total cost of projects, we could arrive up to 75% of the total cost”.

Last year, the EIB lent more than ten billion euro to the energy sector, with more than 20% going to renewable energy projects. An additional 2.6 billion euro was granted for urban public transport systems, it said.

The EIB last week approved a 200 million euro loan to France’s Poitou-Charentes region to support its plans to install photovoltaic panels on public, industrial and commercial buildings. The bank is also in talks about projects in Barcelona, Milan and a number of other cities, said EIB President Philippe Maystadt. 

Eastern European cities to receive specific assistance

The bank will also help cities to set up public transport authorities where required. “The role of this kind of authority is crucial,” Aymerich said, noting that public transport authorities are commonplace in western countries but not in central and eastern European states that have recently joined the EU.

Aymerich added that the EIB will adapt its funding mechanism to meet cities’ needs. “We arrived at the conclusion that our standard financial instruments are not adequately targeted to the real needs of operators and small cities. So, the intention is to shift our standard portfolio and to increase as much as possible our activities in this particular field.”

Luxembourg Green MEP Claude Turmes applauded the EIB's initiative, saying the 15 million euro of technical assistance will be "crucial" for cities. "What the EIB is doing right now is really good," he said, because local authorities did not have the financial means to support "bankable projects". Turmes mentioned a three-billion venture in Barcelona and another big plan in Paris to renovate schools which could receive support as a result.

"What is lacking now is proper Commission backing," Turmes said, complaining that President Barroso had come empty handed to a meeting of major city leaders on Tuesday (10 February). The Commission had promised to earmark €500 million for "smart energy cities" in its proposed economic recovery package, but the funding has now been dropped in favour of projects that are more likely to find support from countries such as Germany, he said.

Roman Meininghaus, environmental policy director at ACEA, the European carmakers' association, said the first driver for bringing cleaner vehicles to the mainstream was "customer and market demand". Public procurement, he said, "can be a driver" but only if implemented in the right way. Above all, he said, clean vehicles need to become "affordable and harmonised" for demand to increase.

Speaking on behalf of the City of Hamburg and UITP, the international organisation for public transport authorities, Heinrich Klingenberg said greener public procurement is needed to improve transport in Europe's cities. Cities, he said, can provide examples through benchmarking and sharing of best practice. But he also said there needed to be increased awareness of public procurement rules. "There is a lack of practical tools, information and training," he said. 

One example, he said, is how the City of Hamburg is supporting the development of hydrogen buses by pooling its procurement capacity with other cities. Potentially interested cities include Barcelona, Berlin, Cologne and London. "You have to team up with others to reach economies of scale," he said. "What we are doing now is setting up specifications for a fleet of 100-150 of these buses. That will help us bring down the costs with economies of scale."

In December last year, EU finance ministers approved an increase in the EIB's capital from around €50 billion to around €65 billion in 2009 (EURACTIV 3/12/08). 

Under an EU economic recovery package also adopted in December, some four billion euro will be made available to help car manufacturers make cleaner vehicles (EURACTIV 27/11/08).

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