Biofuels must meet tough criteria to get loans – European bank

05 November 2009 14:53  [Source: ICIS news]

PARIS (ICIS news)--The European Investment Bank (EIB) welcomes loan applications for biofuels projects, but the lending criteria for the sector is very high, an EIB official said on Thursday.

“There are very strict social and environmental conditions involved in the process,” said EIB sector economist Oliver Henniges during a presentation at the World Ethanol 2009 conference in Paris.

The EIB in the last few years received around 200 applications for biofuels projects but has approved only two loans, he said.

Applications for biofuels projects disappeared for a while, but the bank is again receiving many proposals, the official said.

According to Henniges, the drop was likely due to the fallout from the food-versus-fuel debate, which he said was completely flawed.

“In my personal opinion the whole thing is stupid,” he said. “Biofuel production is at an all-time high while farm prices remain down.”

But Henniges acknowledged that the debate created an image problem, which is making it more difficult to approve loans for biofuels projects.

There is no “official policy” against biofuels at the EIB, but the bank is now very strict with the sector.

Henniges said biofuels can also be very complex and somewhat outside the realm the EIB prefers to work in.

The bank tends to focus on operations like motorways, which require much larger funding than what is needed for biofuel projects, he said.

Yet a biofuels project takes as much time to be evaluated as a motorway, he added.

The challenges for the sector’s outlook include long-term sustainability and technical acceptance of its products, Henniges said.

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By: William Lemos
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