“To pro­tect the diver­sity of our nat­ural sur­round­ings we need to pro­mote the diver­sity of our fund­ing sources. The Nat­ural Cap­i­tal Financ­ing Facil­ity is a new EU fund­ing source that helps busi­nesses to pro­tect nature and adapt to cli­mate change. Now these blended funds can help bio­di­ver­sity blos­som and truly become an engine for growth”, said Kar­menu Vella, Euro­pean Com­mis­sioner for Envi­ron­ment, Mar­itime Affairs and Fisheries.

In line with this argu­men­ta­tion the EU has set up the Nat­ural Cap­i­tal Financ­ing Facil­ity, oper­ated by the Euro­pean Invest­ment Bank. The Nat­ural Cap­i­tal Financ­ing Facil­ity (NCFF) is a finan­cial instru­ment that com­bines EIB financ­ing and Euro­pean Com­mis­sion fund­ing under the LIFE Pro­gramme, the EU’s fund­ing instru­ment for the envi­ron­ment and cli­mate action. The NCFF will con­tribute to meet­ing the objec­tives set out by LIFE, in particular:

• nature and biodiversity
• cli­mate change adaptation

As you can see below (What does the NCFF do?) there is an explicit ref­er­ence to bio­di­ver­sity off­sets being made: “Bio­di­ver­sity off­sets / com­pen­sa­tion beyond legal require­ments (e.g. com­pen­sa­tion pools for on-site and off-site com­pen­sa­tion projects)”.

Read more on the Nat­ural Cap­i­tal Financ­ing Facil­ity here and see some infor­ma­tion pasted below. See also the related press release (New Euro­pean sup­port to address cli­mate and bio­di­ver­sity chal­lenges).

What does the NCFF do?

The NCFF will sup­port projects that are focused on bio­di­ver­sity and ecosys­tem ser­vices (BES).

Projects sup­ported by NCFF will pro­mote the con­ser­va­tion, restora­tion, man­age­ment and enhance­ment of nat­ural cap­i­tal which can ben­e­fit bio­di­ver­sity and cli­mate adap­ta­tion. This includes ecosystem-based solu­tions to chal­lenges related to land, soil, forestry, agri­cul­ture, water and waste.

Project exam­ples include:

• Green infra­struc­ture (e.g. green roofs, green walls, ecosystem-based rain­wa­ter collection/water reuse sys­tems, flood pro­tec­tion and ero­sion control).
• Pay­ment for ecosys­tem ser­vices (e.g. pro­grammes to pro­tect and enhance forestry, bio­di­ver­sity, to reduce water or soil pollution).
• Bio­di­ver­sity off­sets / com­pen­sa­tion beyond legal require­ments (e.g. com­pen­sa­tion pools for on-site and off-site com­pen­sa­tion projects).
• Pro-biodiversity and adap­ta­tion busi­nesses (e.g. sus­tain­able forestry, agri­cul­ture, aqua­cul­ture, eco-tourism).

What are the objec­tives of the NCFF?

The NCFF will pro­vide finan­cial sup­port to projects in order to gen­er­ate rev­enue or save costs. In doing so, the Facil­ity aims to prove to the mar­ket and to poten­tial investors the attrac­tive­ness of bio­di­ver­sity and cli­mate adap­ta­tion oper­a­tions in order to pro­mote sus­tain­able invest­ments from the pri­vate sector.

The NCFF will employ a range of dif­fer­ent financ­ing options for dif­fer­ent projects, includ­ing debt and equity financ­ing as well as direct and inter­me­di­ated funding.

These financ­ing options will be tested in order to iden­tify the most suit­able approach, align­ing fund­ing solu­tions to the spe­cific needs of the bio­di­ver­sity and cli­mate adap­ta­tion sectors.

How will the NCFF work?

The pilot phase of the NCFF project will last 3 years (2014–2017) with up to EUR 125 mil­lion being made avail­able for invest­ments in 9–12 oper­a­tions. Depend­ing on the project types and the spe­cific con­di­tions within them, the NCFF will allow the pro­vi­sion of direct and/or inter­me­di­ated debt financ­ing. A fur­ther EUR 10 mil­lion will be pro­vided for tech­ni­cal assis­tance in the form of a Sup­port Facil­ity. This will be made avail­able to eli­gi­ble final recip­i­ents and/or finan­cial inter­me­di­aries for project prepa­ra­tion, imple­men­ta­tion, mon­i­tor­ing and evaluation.

Tar­geted projects must be located in the EU-28 and ide­ally have a size of EUR 5–15 million.