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Cleantech Guarantees: Advancing Decarbonization by Financing Production Facilities

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The Energy Resilience Leadership Group, in collaboration with over 20 European think tanks and leading European cleantech manufacturers, has issued a compelling open letter that emphasizes the critical role of the Guarantee Facility managed by the European Investment Bank (EIB) in ensuring the success of the continent's industrial transformation and fostering a sustainable future.

The recent revelation of the European Commission's Wind Power Action Plan marks a significant stride in the right direction. The commitment to providing de-risking guarantees through the EIB for wind energy manufacturing, coupled with the inclusion of electricity grids in the Grid Action Plan, is an encouraging signal. These developments align seamlessly with our shared vision for a more sustainable and resilient Europe. However, the guarantees should not be limited to a few individual cleantech sectors but should also be made available to other important sectors in accordance with the Net Zero Industry Act (NZIA).

Public guarantees emerge as the linchpin for financing projects by emerging cleantech manufacturers.

The Energy Resilience Leadership Group and its partners highlight five strategic reasons for the need to extend performance guarantees to all of NZIA's priority cleantech sectors:
  1. Securing Europe's energy transition: Guarantees are indispensable for both large-scale energy infrastructure projects and cleantech start-ups. They ensure suppliers deliver on promises, protecting operators from financial losses. Public guarantees enable commercial banks to cover a significant portion of project financing needs, providing safety for all stakeholders involved.

  2. Addressing capital market failures: Ambitious climate goals necessitate a substantial increase in wind and electricity grid investments. Guarantee programs empower European manufacturers and startups to invest confidently at the required speed. Failure to do so risks not only the competitiveness of European manufacturers but also threatens the overall success of Europe's energy transition.

  3. Fast-tracking emerging technologies: The success of the energy transition relies on bringing emerging technologies to commercial scale rapidly. Cleantech companies face financial challenges in mobilizing investment due to limited collateral and a lack of established credit history. Public guarantees offer a strategic instrument to mobilize private capital and advance cleantech manufacturing.

  4. Access over cost: The challenge lies in access, not cost. Prudential risk requirements hinder commercial banks from expanding manufacturers' guarantee limits. The Energy Resilience Leadership Group advocates for a solution that ensures European wind manufacturers and supply chains do not suffer competitively, jeopardizing the continent's energy transition.

  5. EIB's counter-guarantee, a catalyst for a thriving green economy: Shifting the risk from commercial banks to the EIB's balance sheet, facilitated through InvestEU, is a crucial intervention. The EIB emerges as the main catalyst for the most significant transformation of this century, ensuring the pace and ambition of Europe's energy transition align effectively.

The undersigned organizations collectively urge the European Commission and European Investment Bank to swiftly approve the announced guarantee facility. Furthermore, we advocate for the expansion of the instrument's scope to encompass strategic cleantech manufacturing sectors in line with the EU’s priority technologies as per Net Zero Industry Act (NZIA). Please join us in championing a sustainable, resilient, and green future for Europe. Together, we can make a lasting impact on the energy landscape and propel our continent towards a cleaner and more prosperous tomorrow.

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