16/11/23

EUROPE: Poorer EU regions look to citizens to finance the green transition

As published on: euractiv.com, Thursday 16 November, 2023.

Deprived EU regions are looking at innovative solutions like crowdfunding and citizen-led energy communities to finance the transition to a net-zero economy.

As the EU moves forward with the green transition, some European regions fear being left behind in the face of the capital-intensive investments ahead.

Regions in countries like Romania and Bulgaria, where GDP per capita is below the EU average, often struggle to attract funding, explained Dumitru Fornea, a Romanian trade unionist who sits on the EU’s Economic and Social Committee (EESC), a consultative body.

And they’re not the only ones. “Spanish, and maybe Czech and Slovak” regions as well often struggle to attract green funding, Fornea told participants at a recent Euractiv event.

Financial markets care little for regions focused on declining manufacturing industries like coal and steel because they “don’t have a very attractive profile”, he explained.

EU experimenting with crowdfunding
But solutions may also be closer than they think – such as crowdfunding where “the workers themselves or the members of the community themselves contribute to a certain project,” says Fornea.

The European Commission is currently experimenting with this.

“Crowdfunding is part of what we call innovative financing schemes,” said Michele Sansoni, who works at the European Commission’s Climate, Infrastructure and Environment Executive Agency (CINEA).

Europe’s LIFE programme, which is managed by CINEA and supported the Euractiv event, is currently giving up to €1.75 million to asssit local and regional authorities in their switch to clean energies.

“Innovative financing schemes, like crowdfunding, could really contribute to the clean energy transition at the local level,” Sansoni said.

But although crowdfunding may look attractive on paper, “the reality is that the projects that we fund are kind of struggling to find interested developers,” the official admitted.

“Maybe now is not the right time to ask [people] for money,” Sansoni wondered, pointing to tough economic times caused by the combination of inflation and recession in some parts of Europe.

And even though crowdfunding may sound like a good idea, “projects are confronted with challenges,” he added, citing lack of interest for an EU-funded solar rooftop project aimed at supermarkets in Spain and Italy.

While many supermarkets looked to crowdfunding as a way to finance their solar PV installations, the idea was largely rejected in Spain while only two projects were completed in Italy.

Energy communities
As crowdfunding struggles to pick up, another concept has attracted the attention of regional authorities: energy communities, or citizen-led green energy projects owned by the local population.

“Where there’s a little bit of money, you’re getting people who are investing their own cash in a local setup,” said Adrian Hiel from Energy Cities, a network of local authorities.

That in turn pays dividends, as households use the energy to save on their bills, thereby also driving up public acceptance with the energy transition, Hiel said.

Energy communities were first introduced in EU law four years ago, with the last revision of EU electricity market rules.

However, not all EU countries have implemented the law as intended.

Poland, Sweden, Czechia and Bulgaria have all “badly” transposed the law into their national legislation, according to REScoop, an association dedicated to local energy cooperatives. Meanwhile, another ten EU countries have “substantial” deficiencies in their transposition, the association said.

Neither way of channelling local money into the green transition is without challenge, it seems.

Tags

EU Europe Green transition ESG