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A New Legal Framework for EU Energy Infrastructure Development and Finance - Part II: Financial Framework

Lothar Van Driessche

This contribution offers an analysis of the proposed energy infrastructure package of the EU, from a business practice point of view. The new regulatory framework for energy infrastructure development is based on three main pillars: (i) permitting and procurement procedure, (ii) cross-border allocation of costs and (iii) financing. The first two pillars are dealt with in a separate contribution in this issue: “Part I: Regulatory Framework” (p. 52–62). The financial pillar of the infrastructure package will be part of an integrated policy initiative known as the Connecting Europe Facility (CEF). Large emphasis will be put on debt and risk sharing instruments, including the Europe 2020 Project Bond Initiative. Several issues with financial instruments that have been encountered under the current and previous frameworks, seem to have been addressed by the new proposals, including the lack of focus on EU added value, the need for standardisation of instruments and asymmetric risk sharing between the EU and its intermediaries that are involved in the issuance of EU funded financial instruments (notably the EIB). Nonetheless, a number of potential problems and issues remain. The outcome of a pilot phase of the Europe 2020 Project Bond Initiative under the current multiannual financial framework will provide useful feedback and pave the way for its introduction under CEF. Stakeholders in the field have also made a number of useful comments and suggestions, which are interesting to look into and should be used to further optimise the design of these financial instruments. All this should result in the creation of a separate class infrastructure security, providing access to liquid capital markets for private (debt) financing of infrastructure, notably by institutional investors, which need long-term assets to match their long-term obligations.


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