Building on the EU's Circular Economy Strategy launched recently, the European Commission and the European Investment Bank (EIB) have made changes to a credit agreement to make a €24 billion funding tool available to businesses that want to transition to a circular economy model.
A circular economy is one where businesses and individuals try to keep resources in use for as long as possible, extracting the maximum value from them and recovering and reusing them as far as is possible. The previously relied on linear model, often described as "take-make-dispose" is generally agreed to be no longer sustainable.
The Commission and the EIB have made an amendment to the InnovFin Delegation Agreement to allow businesses with higher risk, innovative sustainable business models to access credit through InnovFin, an EU finance support package. InnovFin, part of the Commission's Horizon 2020 programme, was previously only available to industrial and technology businesses, the EIB said.
InnovFin Advisory, a financial advice service run by the EIB, will help mid-sized businesses to prepare projects to benefit from the available finance, the bank said.
Karmenu Vella, EU commissioner for environment, maritime affairs and fisheries, said: "This Commission has made the transition to a more circular economy a priority of our work. And for small and medium businesses across Europe, we are committed to making that transition as easy as possible. Now one week after we launched our proposal, we have a real financial commitment. Today's signing of an extension of funding coverage with the EIB will help our risk-takers make that leap to a more sustainable model of production."
The funding announcement came as the EIB announced a new report analysing the role of finance in the transition to a circular economy. The report "presents practical actions to finance the re-use, repair, refurbishing and recycling of existing materials and products", the bank said.
According to the report, consideration should be given to the creation of "a dedicated circular economy labelled platform" that would bring together the Commission EIB, other banks and private sector investors "in order develop knowledge, intelligence and create awareness among the different stakeholders involved".
The European Commission launched a 12-week circular economy consultation in May, consulting on a new version of a waste review, and a new action plan for a 'competitive' circular economy.
The Commission had adopted a 'circular economy package' in July 2014. However, this had a "rather exclusive focus on waste management without appropriately exploring synergies with other policies," and was withdrawn in December 2014 with a plan to replace it with a "new, more ambitious proposal" in 2015. The new proposals were outlined on 2 December.