LIFE gets new project financing tools

The European Commission's contribution to the Natural Capital Financing Facility (NCFF) and the Private Finance for Energy Efficiency (PF4EE) instruments will come through the LIFE programme, expanding its sphere from the provision of action grants to projects and operating grants to non-governmental organisations.

The NCFF instrument will support projects that promote the preservation of Member States' natural capital through loans and equity investments. 'Natural capital' is the stock of natural assets in an ecosystem which provide benefits known as ecosystem services. These include vital services such as pollination of plants, natural protection against flooding, and the regulation of our climate.

NCFF will involve three different types of investment by the EIB: direct loans to projects, indirect loans to projects through financial intermediaries, and indirect investment in projects via equity funds. The EIB will provide direct loans to bigger projects, as it typically does, whilst the indirect loans and equity investments will be aimed at smaller projects.

Target project areas

The instrument's beneficiaries may include both public and private entities, such as public authorities, land owners and businesses. Project sizes are generally expected to be between €5 and €15 million, with 9 to 12 operations set to be financed during the pilot stage.

The target areas for projects are as follows:

  • green infrastructure (e.g. green roofs, green walls, ecosystem-based rainwater collection/water reuse systems, flood protection and erosion control);
  • payment for ecosystem services (such as programs to protect and enhance forestry, biodiversity, to reduce water or soil pollution);
  • best practices in biodiversity offsets/compensation beyond legal requirements (for instance, compensation pools for on-site and off-site compensation projects); and
  • pro-biodiversity and adaptation businesses (e.g. sustainable forestry, agriculture, aquaculture, eco-tourism).

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