Post - Blog
Financing the Europe’s green energy transition
- 6 days ago (2025-01-14)
- Junior Isles
Catia Tomasetti , Partner, BonelliErede; and Michele Florio , Managing Associate, BonelliErede
E-World 2025
The 29th UN Climate Change Conference (COP29) in Baku was attended by almost 200 countries. It was billed as the ‘finance COP’, as climate finance was indeed one of the main items discussed. After intense negotiations, the conference – which focused on securing the significant financial investments needed to reduce emissions and protect vulnerable populations – approved the commitment of developed nations to allocate at least $300 billion per year by 2035 to developing countries to be used for green investments to contrast the climate crisis. Moreover, the COP29 Presidency launched its pledges and declarations on energy storage and grids, energy zones and corridors, and hydrogen, which were endorsed by 150 parties.
During COP29, the EU confirmed its support of the ecological transition and its commitment to a modern and competitive economy for the EU, while achieving zero net greenhouse gas emissions by 2050 in line with its current legislation. Indeed, the EU, its Member States and the European Investment Bank (EIB) are together the biggest contributor of public climate finance to developing economies. In 2023, they contributed €28.6 billion in climate finance from public sources and mobilised an additional €7.2 billion in private finance. [1]
In this context, the European Green Deal represents the EU’s growth strategy, which has a very ambitious agenda supported by a variety of funding mechanisms, including: the Just Transition Fund (to support territories most affected by the transition towards climate neutrality); Horizon Europe (a funding programme for research and innovation); the Social Climate Fund (to support the most vulnerable citizens and small businesses with the green transition); and the Innovation Fund (which includes dedicated Project Development Assistance provided by the EIB).
The EIB plays a key role in guiding Europe through the green transition: it operates within the framework of lending mandates and provides technical assistance for project development. In 2020, the EIB announced its intention to align all its financial activities with the objectives of the Paris Agreement on climate change; that same year, it published the EIB Climate Bank Roadmap 2021-2025, which marked its transformation from a climate-supporting bank to an EU climate bank.
As to its EU lending activities, the EIB offers support for the energy transition by way of both direct and indirect lending, implementing several measures to help operators with their liquidity needs.
In alignment with the EIB Climate Bank Roadmap 2021-2025, the EIB is a key driver of projects addressing climate change and environmental sustainability.
Its green products feature broader eligibility criteria under the roadmap’s climate action and environmental sustainability standards. This enhances the EIB’s ability to issue green bonds and support a wider range of sectors and projects beyond energy, including sustainable transport, water management, biodiversity, and the circular economy.
EIB green loans combine climate ambition with financial innovation, maximising impact across diverse industries while maintaining robust environmental safeguards. The EIB remains pivotal in advancing Europe’s Green Deal and global climate goals.
These products are quite significant, especially considering that they enable further elaboration of the current EU Taxonomy so that it can become a common tool for national entities, too, when they are called on to evaluate a financing transaction’s eligibility and to track and trace green investment.
More in detail, the EIB usually participates in financing transactions to support the energy transition by way of pool financing with other commercial lenders. In the case of direct lending, the EIB requests the borrower to execute a bilateral facility agreement in addition to a facility agreement with the commercial lenders involved – both facility agreements are then governed by a framework agreement. The EIB and commercial lenders benefit from the same security package and execute an intercreditor agreement to govern their respective rights and obligations. Though it might appear complex, this kind of structure is actually quite common, and the related contractual documentation can be easily arranged.
Notably, EIB involvement is becoming increasingly frequent, not least because it can lead to significantly better pricing for borrowers and because the EIB provides technical support in arranging financing documents.
Finally, when it comes to energy transition trends, we are seeing an important role being played by national agencies that specialise in providing export credit guarantees and insurance policies for buyer’s credit, supplier’s credit, and structured and project finance (e.g., SACE in Italy). These players offer a range of products to support ‘national’ green deals – for example, in Italy, the energy transition is supported by SACE through (among other things) a ‘green guarantee’, issued at market conditions in favour of lenders financing a project compliant with the EU Taxonomy and counter-guaranteed by the State. This tool can cover up to 80% of financing obligations in relation to projects that use low-emission technologies to produce sustainable goods and services; it also promotes projects relating to new mobility solutions with fewer polluting emissions.
According to a Bloomberg study, Europe needs to invest more than €32 trillion to reach climate neutrality by 2050. This brings us to a very important point: public investment alone is not enough to achieve this goal – the private sector needs to be involved, too. Indeed, achieving these goals will depend on the continued alignment of public and private efforts, in addition to the unwavering determination of EU Member States to implement transformative policies at home.
[1] The European Commission offers a full rundown of the EU’s climate finance efforts here .