France/Investment support: the European program InvestEU launched in France
Mobilizing more than 370 billion euros of investment in the European Union by 2027. This is the objective of the InvestEU program, whose French version was presented on January 27 at a launch event at the Ministry of the Economy.
"Investment is the key to our independence. National independence, European independence. At the opening of the InvestEU launch event in Bercy, France, the words of French Minister of Economy and Finance Bruno Le Maire set the tone for the rest of the day. The stakeholders of the European program, represented at the meeting, kept hammering away at the strategic importance of investments for Europe. This is a very sensitive subject, as the American Inflation Reduction Act (IRA) and its 370 billion dollars in subsidies are raising concerns about the European Union's competitiveness.
The InvestEU program is the successor to the Juncker plan, named after Ursula von der Leyen's predecessor as President of the European Commission.550 billion invested between 2015 and 2020), and to mobilize 372 billion euros of investment by 2027. 26.2 billion in EU budget guarantees, which will attract private and public investment and create a leverage effect.
The aim is to provide funding for a wide variety of economic actors, from social housing providers to major automotive suppliers, as well as a number of SMEs and local authorities.
Serving European priorities
The EU has set itself the goal of becoming carbon neutral by 2050 as part of its Green Pact for Europe, and InvestEU has been designed to help achieve this ambition. At least 30% of the program's financing must be devoted to combating or mitigating the effects of climate change.
This objective is in line with that of the European Investment Bank (EIB), InvestEU's main financial partner, which set itself the goal of reaching 50% of financing dedicated to the climate by 2025. This target has already been exceeded at the EU level, and this share has even reached "more than 70% in France", said EIB Vice-President Ambroise Fayolle, present at Bercy.
Financing the fight against climate change often means strengthening "European independence and strategic autonomy", as Mr. Fayolle put it. This is demonstrated by the first French projects that have already been supported by loans from InvestEU. 315 million loan granted by the EIB Group to Faurecia, the world's seventh largest automotive supplier.
The sum should enable the company to develop its hydrogen industry, an energy that will play a key role in the EU's move away from dependence on fossil fuels. This situation has been brutally highlighted by the war in Ukraine and its consequences.
The EUR 130 million loan granted by the EIB to Loxam, the world's fourth largest equipment and tool rental company, is also part of this dynamic. The company has undertaken to reduce the direct carbon emissions of its branches and vehicles by at least 50% by 2030 and its indirect emissions by 30%. The financing obtained through InvestEU will enable the company to accelerate the replacement of its fleet of fossil fuel-consuming rental vehicles with low-carbon electric equipment.
Closer to home
The implementation of InvestEU relies mainly on the EIB and its subsidiary the European Investment Fund (EIF), but also on other financial partners of the program. Organizations that act on a more or less large scale, such as the Council of Europe Bank (CEB), but also the Caisse des Dépôts (CDC), whose action concerns only France, and its subsidiary Bpi France dedicated to small and medium-sized enterprises (SMEs and ETI).
Eric Lombard, Director General of the CDC, explains that InvestEU will allow the institution he heads to work "closer to the ground". Because its role is in particular to invest within the local and territorial authorities in projects which would be judged not enough profitable by the private investors in the short run, but considered profitable to the taxpayer on the long run by the CDC. Bpi France has, for example, obtained 276 million euros of guarantees through InvestEU. These funds will be dedicated to supporting innovative SMEs, industry and creative sectors.
As for the Council of Europe Bank, an institution whose mission is to protect "the most vulnerable" according to its vice-governor Sandrine Gaudin, the €160 million from InvestEU should enable it to fulfill its social mandate. Whether it be with schools, social housing or training.
While "the economic outlook for 2023 remains uncertain", as European Commissioner for the Economy Paolo Gentiloni said at the close of the event, thethe program is intended to ensure Europe's competitiveness in strategic sectors. In order to overcome this period and to look ahead to the longer term. The Commissioner also stressed the role of the program in terms of "European industrial strategy" and "Green Pact for Europe".
But InvestEU is only one response among others to competitiveness issues in the EU. The European leader mentioned other axes of the Union to assert its economic sovereignty. Such as the REPowerEU fossil fuel exit plan or the reform of the convergence criteria presented in November and currently under discussion. Mr. Gentiloni also put forward the idea of a "European sovereign wealth fund", an idea put forward by Ursula von der Leyen last September. "A common response is essential for the EU to meet the challenge of the U.S. IRA and especially those of Chinese industrial policy and high energy prices," he said.