EIB Group in Poland in 2020: strong support for COVID-19 response and for green recovery
Total financing reached €5.2 billion
One third of the financing contributed to build resilience against the pandemic
41% of the funds supported climate action and environmental sustainability, making 2020 a record year for EIB green investments in Poland
Financing for innovation included projects in renewable energy, mobility and biotech
In a year heavily marked by the COVID-19 pandemic, the EIB Group confirmed its strong support to the Polish economy, providing €5.2 billion of overall financing to the country’s public and private sectors. Volumes delivered in 2020 were largely in line with the trend of the previous years, a sign that the country responded swiftly to the pandemic and continued to invest in the future despite the forced downturn.
Loans granted by the European Investment Bank (EIB) amounted to €4.6 billion, while the European Investment Fund (EIF) provided €660 million in guarantees and equity investments to small and medium-sized businesses and mid-caps. In absolute terms, Poland was the fifth biggest recipient of EIB Group financing among the 27 EU Member States after Italy, France, Spain and Germany.
This overall financing represents around 1% of Poland’s GDP, making the country the first recipient of EIB Group financing on a “per GDP basis” among the 15 largest EU economies.
“If anything can be learnt from the past year, it is that emergency action can and must be accompanied by investments in the future. It is indeed significant that in 2020 the EIB Group not only maintained a high level of support to the Polish economy, but it also managed to invest around one third of its funds into COVID-19 related response initiatives and around 40% into climate action and environmental sustainability. We scaled up our green financing and we will continue to do so this year, while helping the public and private sectors to cope with the pandemic. A green recovery and support for innovation are two goals shared by Poland and the EIB” – said EIB Vice-President Teresa Czerwińska, who is in charge of operations in Poland.
“A sustainable development and climate action are very important goals for Poland. The Covid-19 pandemic has shown clearly that we also have to invest much more in the digital area. Development of cutting-edge technologies will be crucial in the process of digitalization of our economies and will help our citizens in their work and various social activities. I encourage the EIB to back Poland in financing our digital projects” – said Tadeusz Kościński, Minister of Finance, Development Funds and Regional Policy.
COVID-19 response
The EIB provided support to the government’s Anti-Crisis plan to fight the pandemic and its economic and social consequences, with a EUR 650m loan to the Ministry of Finance for COVID-19 financing, which was signed in September. A milestone was the first operation in December with the development fund Polski Fundusz Rozwoju (PFR), which saw the EIB engaged in a bond buying operation for PLN 500m (€110 million) to support the Financial Shield Program, a key nationwide initiative that aims to protect employment and ensure access to financing during a period of severe economic disruption. A second bond buying operation for PLN 2 bn was signed in early February 2021.
Other operations included loans to Small and Medium-sized Enterprises (SMEs) and to municipalities. A EUR 10 m loan to Scope Fluidics came in support of the biotech sector, contributing to research on diagnostics, including for infectious diseases like COVID-19.
Overall EIB Group financing for projects and initiatives linked to the pandemic response in Poland corresponded to about one third of the total financing to the country last year.
Green recovery, energy transition and mobility
The EIB scaled up its financing in support of Poland’s energy transition. Two major operations were signed with Pomerania Wind Farm, a local subsidiary of the Lithuanian group Ignitis Renewables, and with the German developer company wpd AG, for the construction of on shore wind farms. The latter project was financed jointly with Landesbank Baden-Württemberg (LBBW) and received the backing of the European Fund for Strategic Investments (EFSI).
The EIB also signed its first operation to build solar plants with Energy Solar Projekty, a subsidiary company of the Energy and Infrastructure SME Fund managed by the Lithuanian-based investment management company Lords LB Asset Management.
Two operations signed last year are helping to create around Wroclaw an ecosystem for the production of electrical vehicle batteries. In March, the EIB signed a €480 million loan agreement with LG Chem Wroclaw Energy, the Polish subsidiary of the LG Chem Group, for the construction and operation of highly automated and innovative manufacturing facilities for advanced lithium-ion (li-ion) cells and batteries for battery-powered electric vehicles (BEVs). In June, the Bank signed a €125 million loan with Umicore, the Belgian-based global materials technology and recycling group, to finance the greenfield production facility for cathode materials that will be supplied to battery manufacturers of high-tech lithium-ion batteries, including LG Chem.
The EIB continued to finance the sustainable development and revitalization plans of Polish cities and regions. In 2020, 17 cities and regions received EIB loans, for PLN 4.4 billion (equivalent to approximately €1 billion) in aggregate. The first EIB loan to a Polish city below 100.000 people (Ostrow Wielkopolski) was signed in September thanks to a joint financing scheme launched with BGK that will be followed by more such loans under a new PLN 700m programme for small and medium municipalities approved at the end of 2020.
Within its urban financing, the EIB also supported environmental-friendly public transport in cities, including the metro in Warsaw, tramways in Krakow and commuter trains in the Tri-City (Gdansk-Gdynia-Sopot). National rail networks PLK and PKP Cargo also received backing.
Overall, in 2020, climate action and environmental sustainability projects reached 41% of the total EIB group financing in Poland (record year).
EFSI: Poland part of the success story of the Juncker Plan
Poland has also been an important recipient of funds under the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe (Juncker Plan), a joint initiative of the EIB and the European Commission running between 2015 and 2020.
As of 31 December 2020, approved financing under EFSI reached €4,2 billion (of which €276 million in 2020), which are expected to trigger €21,9 billion of mobilised investments. This made Poland rank fifth among EU countries in terms of funds received. The EIB Group looks forward to making the most of InvestEU, the successor of EFSI under the European budget 2021-2027.
EIB reaffirms commitment to a European battery industry to boost green recovery
Over EUR 1 billion expected in support of a strong pan-European battery industry in 2020
At a meeting of the European Battery Alliance on Tuesday 19 May, European Investment Bank (EIB) Vice-President Andrew McDowell, confirmed the Bank’s commitment to supporting a strong, independent European battery industry. The alliance was initiated by European Commission Vice President Maroš Šefčovič in 2017, who also hosted the meeting.
The Bank expects to increase its backing of battery-related projects to more than EUR 1 billion of financing in 2020. This matches the level of support the EIB has offered over the last decade. Since 2010, battery projects financed by the EIB totalled EUR 950 million and supported EUR 4.7 billion of overall project costs. This support benefits from a successful partnership with the European Commission which has enabled new financing instruments such as the InnovFin Energy Demonstration Programme, a tool to facilitate the demonstration phase of innovative energy projects, including battery pilot lines.
The production capacity of EIB lithium ion battery cells projects – both those already approved or signed and those under appraisal stands at 51 GWh. This compares to a current annual production capacity of 49 GWh in the EU (US: 49 GWh; China: 447 GWh). In addition, the EIB finances the development of new materials, improved battery management systems and battery recycling.
“The Covid-19 crisis has highlighted Europe’s vulnerability to interruptions in the supply of critical materials and technologies. As the green energy transition accelerates, creating a European battery industry is vital to protect Europe’s competitive position in the world economy,” said the EIB Vice-President in charge of energy, Andrew McDowell. ”With the support of the European Battery Alliance, the European Investment Bank – the EU Bank – is significantly stepping up our financing of all stages of the battery value chain, from research and development, raw materials extraction and processing through to battery production, e-charging infrastructure and recycling.”
According to Commission Vice-President Maroš Šefčovič: “The corona crisis has further highlighted that the rationale behind the European Battery Alliance is more relevant than ever – to bolster Europe’s resilience and strategic autonomy in critical industrial sectors and in key, game-changing technologies. I am very pleased to see that the private sectors has kept the momentum thanks to the traction created by the Alliance. Accelerating our work is both, possible and needed. The Commission will therefore continue to mobilise all industrial actors, Member States and the EIB to shift things into a higher gear – leveraging investment, establishing a fit-for-future regulatory framework and building our raw materials resilience.”
Batteries – key for decarbonisation and future technologies
State-of-the-art batteries, will be at the heart of Europe’s green transition and already contribute to the decarbonisation of the EU economy. They hold key solutions for low-carbon technologies such as electric vehicles. The EU’s entire battery industry employs more than 30.000 people across 14 countries. Further developing an independent European battery ecosystem would allow the Union to play an important role in a market which is projected to grow to EUR 250 billion/year by 2025. Additionally, a secure local battery capacity would boost the European automotive industry and safeguard thousands of jobs.
However, battery energy storage in Europe – still in the early phases of its development – is facing challenges in manufacturing, shipping, and R&D due to the economic fall-out of the Coronavirus pandemic. Critical battery components are manufactured in China, either by domestic or international producers, and car makers in Europe suffer from severe disruptions to their supply chain. As a consequence, European car manufacturers had to lower their production already before the COVID-19 crisis hit Europe because they ran short in supplies of battery cells.