With the word biodiversity having been mentioned quite a bit in local circles over the past weeks and months, it will be interesting to find out whether economic opportunities and finance can effectively be linked to biodiversity.
I am raising this point because in all the EU environment council meetings I have attended, be they formal or informal, I cannot recall an occasion when the focus was almost totally on biodiversity as was the case in the one just held in Riga, Latvia.
Even more interesting was the fact that one of the working sessions focused almost entirely on the need and practical possibility of identifying and triggering the right financial instruments to actually make economic opportunities in the biodiversity sector morph into a reality rather than remaining an idealistic pipe dream.
This is the whole concept on which natural capital is being built in this day and age. There are various initiatives underway both at the European Investment Bank and the European Commission for a natural capital financing facility and other related financial instruments.
As a country and a government we hope that eventual EU proposals will be cost effective, innovative and creative and will best reflect the necessary link between the economy and biodiversity.
The natural capital financing facility is a financial instrument that combines EIB financing and European Commission funding under the Life Programme, which is the EU’s funding instrument for the environment and climate action.
The NCFF will contribute to meeting the objectives set out by LIFE, particularly with regard to nature and biodiversity as well as climate change adaptation.
It is envisaged that the facility will be managed by the EIB.
It has already been established that the NCFF will support projects focused on biodiversity and eco system services. Projects thus supported will promote the conservation, restoration, management and enhancement of natural capital, which can benefit both areas indicated above. This includes eco system-based solutions to challenges related to land, soil, forestry, agriculture, water and waste.
Among key areas incorporated in it one can find green infrastructure projects such as green roofs, green walls and also eco system-based rainwater collection/water reuse systems as well as pro-biodiversity and adaptation businesses that, beyond sustainable forestry, can also include agriculture, aquaculture and eco tourism.
To protect the diversity of our natural surroundings we need to promote the diversity of our funding sources
One is likely to ask the most logical but also the most obvious question: what are the real objectives of the NCFF?
The facility will provide financial support to projects to generate revenue or save costs. In doing so, it aims to prove to the market and potential investors the attractiveness of biodiversity and climate adaptation operations to promote sustainable investments by the private sector. It can employ a range of different financing options for different projects, which include debt and equity financing as well as direct and intermediate funding.
There is a pilot phase of this project that runs till 2017 and up to €125 million are being made available. Depending on the project types and specific conditions, the NCFF will allow the provision of direct and/or intermediate debt financing. Targeted projects must be located in the EU-28 and ideally be in the €5-15 million budget range.
The most important message of all this is that the economy and nature can work together for mutual benefit. This is the kind of win-win scenario we should be constantly encouraging, as an ongoing process rather than a one-off initiative.
Its success will be best gauged by the extent of the involvement of the private sector in schemes that can contribute to the twin climate priorities of reducing energy use and conserving natural capital.
In its own way, this initiative will also directly help in Europe’s own contribution to achieving global energy, climate and environmental goals.
This is indeed a case where the EU is putting the money where it matters.
In focusing on energy efficiency and climate protection, these new instruments will unlock significant public and private investments in two key strategic areas.
The bottom line is that, in order to protect the diversity of our natural surroundings, we need to promote the diversity of our funding sources.
I am in total agreement with the European Commission, as stressed by the Environment Commissioner, that these funds can help biodiversity blossom and truly serve as an engine for growth.
Leo Brincat is Minister for Sustainable Development, the Environment and Climate Change.