Spring Agreement makes Green Investment Company possible
The Spring Agreement of the Dutch government set aside a budget of 10 million for the support of green investment projects. The cabinet is also making a sum of 70 million available in 2013 via a revolving fund, and thereafter another 58 million. The fund is being set up in conjunction with the building, energy and financial sectors. The budget, along with commitments from the financial industry, including ABN AMRO and ING, will make it possible to take concrete steps towards the establishment of a Green Investment Corporation (GIC). The GIC is an initiative of HFC. A study and an investment proposal for the GIC were presented in Nieuwspoort international press centre in The Hague last week.
Contents of the Spring Agreement / Spring Memorandum
“Financiers are sometimes reluctant to provide funds for projects related to energy saving and sustainable energy, often as a result of their lack of familiarity with such projects, the small scale of the projects, or the high risk profile of individual projects. As a result, energy savings and sustainable energy options, which are in themselves economically viable, are having a hard time getting off the ground. These measures can increase their ability to attract financing, for example by setting up a foundation (i.e. a Green Investment Corporation) that can bundle such small-scale projects, validate their added value and feasibility, and support the financing process. In 2013 an initial subsidy of 10 mn euros will be made available from the budget of the Ministry of Economic Affairs, Agriculture and Innovation. After a period of two years the measure will be reevaluated”.
Money has also been made available to set up a revolving fund for the conversion of existing buildings to more energy-efficient systems. The text of the announcement was as follows.
“Energy saving measures in the built environment can help households and businesses in the Netherlands to manage living and housing expenses, enabling them to limit the impact of energy price increases and higher energy taxes. In addition, these measures contribute to European climate objectives. This budget (70 mn in 2012, followed by a further 58 mn, made available by the Ministry of Economic Affairs and Kingdom Relations) is available for the co-financing of both large-scale projects, including housing corporations, healthcare facilities, schools and swimming pools, as well as the financing of private initiatives. Because the fund is fully revolving, the money returns and is again made available for investment. It will be set up in conjunction with parties from the construction, energy and financial sectors. The fund will be structured so that fluctuations in the fund will not affect the EMU’s balance and debt levels.
GIC background information
The objective of the public-private Green Investment Corporation (GIC) is to eliminate financing bottlenecks and provide a stimulus for projects that can make the economy more sustainable. In addition, the GIC will help us to achieve the European climate objectives and create new jobs. Investment in sustainable energy projects will make the Netherlands less dependent on fossil fuels and help us to manage our energy costs. HFC, under the leadership of Lex Hoogduin, commissioned the study into the feasibility of the Green Investment Corporation, and has also developed an investment proposal. The report was published last week.
GIC investment proposal
The conclusion of the study is that there are several stumbling blocks in the market with regard to the financing of sustainable projects. As a result, many financing efforts and investments fail to get off the ground. A close public-private cooperative effort in the form of a Green Investment Corporation could help to eliminate some of these stumbling blocks, and promote the acceleration of the process of making the Dutch economy more sustainable.
The investment proposal calls for the government and the private sector to share the process costs of the GIC, and for the private sector to take responsibility for the investment funds. Investments sponsored by local government and European institutions (such as the EEF, EIF, or EIB) can also participate in the GIC funds. The start-up and development costs of the GIC are expected to total € 5 million, and to generate multiples of this amount in investments.