BRUSSELS (Reuters) – The European Commission could lower capital requirements for banks’ environmentally-friendly investments in a bid to boost the green economy and counter climate change, the EU executive’s vice president said on Tuesday.
The Commission, which is in charge of proposing laws at EU level, is “looking positively” at plans to reduce capital requirements for banks’ green investments, Valdis Dombrovskis said at the “One Planet” summit on climate change financing in Paris.
“This could be done at first stage by lowering capital requirements for certain climate-friendly investments, such as energy-efficient mortgages or electric cars,” Dombrovskis said in a speech at the conference held on the second anniversary of the Paris climate accord.
He added that the reduced charges could be modelled on “existing discounts for investments in small and medium-sized enterprises or high-quality infrastructure projects”.
Currently, the EU grants capital reductions of 23.81 percent for banks’ exposures to small firms for investments below 1.5 million euros (1.3 million pounds), and is considering a 15 percent reduction for the share of investment above that threshold.
The climate change financing move would be part of a broader set of measures the EU plans to present in March to boost green investment and meet the target of cutting carbon emissions by 40 percent by 2030.
Brussels estimates that around 180 billion euros in additional low-carbon investments are needed per year to meet the target.
(Reporting by Francesco Guarascio)