PESCARA CLIMATE ACTION & CIRCULAR ECONOMY FL

Financing of the city of Pescara's 2021-2025 investments in circular economy / waste management and in energy efficiency.

The project consists of a framework loan (FL) for the implementation of the 2021-2025 investment programme of the city of Pescara in the sectors of solid waste management / circular economy (first component) and in energy efficiency (second component) respectively. The first component comprises an anaerobic digestion (AD) plant processing bio-waste, the upgrading of an old sorting station and the revamping of a recycling platform and the acquisition of new collection equipment. The second component will include the retrofit of efficient lighting, thermal coating, installation of energy efficient windows / doors, rooftop solar photovoltaic (PV) installations and the installation of Building Management Systems (BMS) in public buildings in Pescara. It also consists of a pipeline of energy efficiency measures in 55 public buildings including schools, offices, sports' facilities, under the GSE Thermal Account incentives' programme.

The solid waste management service is considered a "public good" because its consumption is non-excludable and non-rival. The sector is subject to free-rider problems and the fact that the service is not delivered through a network limits the Promoter's ability to recover full costs. The EIB will provide long-term financing for the economic life of the Anaerobic Digestion plant including the equipment and the other waste facilities that would not be available on the market. This will help to attract other co-financiers. Indeed, the EIB loan will have a strong signal effect on the soundness of the Borrower's strategy, and a catalytic effect reinforcing lenders' confidence in the Borrower's ability to pursue its objective by accessing affordable debt. As such, the EIB's contribution is an important element of the overall financing plan in terms of additionality, diversification as well as duration and pricing.

This is the EIB's first operation with the borrower. It will enable the EIB to support sustainable waste management contributing to the transition towards a circular economy. The EIB's financing will help the Promoter to generate 200 man-hours/years temporary and 25 permanent jobs in the city of Pescara. The entire investment, i.e. 100%, will be carried out in the Cohesion areas.

The EIB financing will help to reduce negative externalities affecting environmental protection and public health, while strengthening the recycling performance of the region. Negative externalities related to waste management activities concern pollutants and greenhouse gas emissions, as well as costs related to damage to environmental protection and public health. In addition to the environmental externalities arising from the production of recycling replacing the extraction of raw materials and the production of renewable energy replacing fossil energy, security of supply issues must also be considered as a market failure due to their public good characteristics.

Moreover, the proposed operation aims to finance energy efficiency ("EE") projects in Italy, in public buildings, therefore supporting the EU's and Bank's priority in the energy sector and the EIB's climate action objectives.

Through energy savings, energy efficiency projects reduce carbon emissions and air pollution, increase comfort and air quality in the dwellings, social and public benefits. The EE investments in buildings suffer from a chronic lack of investments. The project shows how to upscale EE in public buildings through an ESCO model company and show how EIB can be additional to the national incentives for EE like the thermal account the Italian government has launched for certain EE project in public buildings. In addition, given the labour-intensive nature of the building sector, largely dominated by local businesses, renovation of buildings also plays a crucial role in job creation.

The EIB support to this operation is expected to provide a tangible value-added, contributing to accelerating the implementation of the underlying EE schemes, by lowering the associated cost of funding and offering a maturity beyond the tenor usually offered by commercial banks as well as disbursement mechanics more flexible and interest rates options wider than those normally proposed by the market.

The abovementioned facilities are likely to fall under Annex II of the EIA Directive 2014/52/EU amending Directive 2011/92/EU, SEA Directive (2001/42/EC), Habitats Directive (92/43/EEC) and Birds Directive (2009/147/EC). The project will also support energy efficiency investments that contribute to the reduction of greenhouse gases emissions and other airborne pollutants. The Bank will assess and if needed will reinforce the Promoter's capacity to appraise sub-schemes for compliance with national regulations and EU environmental and biodiversity requirements and EU Directive on Energy Performance Building as well as its capacity to support the Bank's Public Disclosure Policy, which aims at facilitating access by the public to environmentally relevant information.

The Bank will require the Promoter to ensure that contracts for the implementation of the project will be tendered in accordance with the applicable EU procurement legislation Directives 2014/23/EU, 2014/24/EU or 2014/25/EU, where applicable, as well as Directives 92/13/EEC and 89/665/EEC as interpreted by the Court of Justice of the EU, with publication of tender notices in the Official Journal of the EU, as and where required.