Building a pipeline of climate adaptation investments

THE BACKGROUND

Climate change impacts are having far-reaching effects inside and outside the Union. Water shortages, exceptional wildfires, and heat waves in the EU have affected economic activities as diverse as agriculture, aquaculture, tourism, power plant cooling, and cargo shipping on rivers. It affects not only the economy, but also the health and well-being of Europeans. It also poses risks to food security, worsens existing social inequalities and threatens cultural heritage.

The primary response to the climate threats is to reduce greenhouse gas emissions as quickly as possible. The European Climate Law sets a legally binding target to reach climate neutrality by 2050, with an ambitious 55% reduction target by 2030 compared with 1990 levels. Without similar global commitment, the increase in global surface temperature will exceed 2°C during the 21st century.

With the world already experiencing more than 1°C of warming compared to 1850–1900, and with further warming locked into the climate system even under rapid emission reduction scenarios, adaptation to current and future climate change is an essential complement to efforts to reduce emissions and support climate change mitigation. The gravity of the adaptation challenge makes it a whole-government and whole-society endeavour. It is vital for the private and public sectors to work together more closely, in particular on financing adaptation.

THE PROJECT

The EIB is one of the world’s main financiers of climate action and environmental sustainability. The Climate Bank Roadmap (CBR) 2021-2025, published in December 2020, outlines the EIB goals for climate finance that support the European Green Deal and the net-zero agenda. The three key elements of the CBR are:

• The EIB supports EUR 1 trillion of investments in climate action and environmental sustainability in the critical decade from 2021 to 2030;
• The EIB gradually increases the share of its financing dedicated to climate action and environmental sustainability to exceed 50% of its operations by 2025;
• The EIB aligns all its financing activities with the principles and goals of the Paris agreement by the end of 2020.

Following on the commitments of the CBR, the EIB published its first Climate Adaptation Plan in October 2021. As part of this Plan, EIB also launched the Climate Adaptation Investment Advisory Platform (ADAPT) to provide technical and financial advice to clients inside the EU.

Building on these strategies and plans, our mission aimed to build an adaptation project pipeline that could potentially be financed and/or supported with technical assistance from the EIB.

THE RESULTS

Specific advisory services were provided to identify concrete adaptation investment projects suitable for EIB financial and advisory support. The services included designing operational approaches and tools for the strategic identification and origination of adaptation operations to be financed by the EIB. The consultants presented options for engagement and execution strategies for investing in several sectors: water scarcity, flooding, energy protection, food systems, forests and ecosystems, and disaster risk management.