European member states have approved a €10bn capital increase into the European Investment Bank which will help enable a number of energy and environmental projects.
Amongst the projects expected to benefit is the construction of an integrated offshore electricity grid in the North Sea, the Irish Sea, the English Channel, the Baltic Sea and neighbouring waters.
This will transport electricity from wind farms and other offshore renewable energy sources to centres of consumption and storage, and increase cross-border electricity exchange and security.
This and other projects are part-financed by "Project Bonds"; credit enhancement in the form of private debt issued by the sponsors of a project, whose risk is backed by the European Investment Bank and the EU, including an upfront capped contribution from the EU budget.
The extra funding for the EIB will allow it to provide over €60bn in total over a three-year period for many more economic revival projects across the European Union.
“The unanimous decision by the governors of the European Investment Bank to strengthen the bank’s capital base and enable an additional €60bn of increased lending demonstrates a shared desire to support investment that will create jobs and contribute to economic growth in Europe," EIB president Werner Hoyer said.
"We are committed to working with national authorities, public investors and private business to ensure effective use of the additional lending across all member states and to unlock significant private investment for projects,” he added.
Raising the EIB's capital was part of the so-called "European Growth Pact", agreed at the June 2012 summit of EU leaders. This was the summit at which David Cameron threatened to wield a veto if Britain's interests were jeopardised in the European single market. Eurozone leaders are hoping that 17 of the 27 EU nations will eventually move towards a more integrated banking union under the European Central Bank.
The Growth Pact aimed to raise €120bn to restart the European economy as soon as possible, and included a reallocation of €55bn worth of unused structural funds to small and medium-size enterprises, as well as the pilot phase for the new Project Bonds, worth €5bn.
It is these which support projects in energy, transport and broadband infrastructure.
Other energy projects potentially enabled by Project Bonds that affect the UK include a North-South gas interconnector in Western Europe (NSI West Gas) and a North-South electricity interconnection in South-Western Europe (NSI West Electricity).
The latter will develop interconnections between the region and Mediterranean countries to integrate electricity from renewable sources into the grid, potentially bringing solar electricity from that region within reach of British citizens.
Other potential projects include electricity and gas connections in Central Eastern and south-eastern Europe, and in the Baltic area, as well as the Southern Gas Corridor.
The connection of pan-European electricity grids is a necessary step towards liberalisation of the energy markets across the European Union.
Story: David Thorpe, News Editor