New loan guarantee scheme boosts clean tech

The government has approved Finland’s participation in the EUR 700 million InvestEU guarantee scheme for small and medium-sized enterprises (SMEs), households and housing companies, said the Ministry of Economic Affairs and Employment and the Ministry of the Environment in a joint press release.

The programme promotes investments in clean technology solutions. Finland will invest EUR 100 million in the European Investment Fund’s (EIF) Sustainability Guarantee product, which is a guarantee programme delivered through financial institutions.

It is estimated that the leverage effect of Finland’s contribution is seven times higher.

The guarantee model allows funding to be allocated to investments that improve the energy efficiency of buildings, for example.

In addition, funding could be used to renew the heating systems of buildings so that they can utilise renewable forms of energy, such as geothermal heat, wind or solar energy.

The guarantee scheme is also suitable for vehicle charging infrastructure, electric car purchases and other investments in line with the EU taxonomy, i.e. the classification system for sustainable activities.

“Clean solutions that improve energy self-sufficiency are cost-effective for households and SMEs in the long term, but making major initial investments is impossible for many. This new loan guarantee model makes it possible to improve the energy efficiency of buildings and make sustainable choices in heating and transport. At the same time, the measures will help in work against climate change and in phasing out fossil energy,” said Minister of the Environment and Climate Change Maria Ohisalo.

“The InvestEU programme enables many Finnish companies and households to invest in renewable domestic energy and clean technology solutions. I am confident that Finland is able to make full use of the opportunities offered by the programme,” said Minister of Economic Affairs Mika Lintilä.

In Finland, the loan guarantee scheme is managed by the Ministry of Economic Affairs and Employment and the Ministry of the Environment.

Loan guarantee scheme scheduled for early part of 2023

The activation of the loan programme still requires that Finland and the European Commission sign agreements on funding shares and guarantees. Lintilä and Minister of Finance Annika Saarikko will sign the agreements on behalf of Finland soon.

Subsequently, the Commission will enter into an agreement with the EIB Group, after which the EIB Group and Finnish banks will agree on delivering the product. The loan guarantee scheme is set to be launched in the early part of 2023.

The banks will grant guarantees for loans to SMEs, housing companies and households at least until 2026 and possibly longer.

Finland’s liability for the scheme does not exceed EUR 100 million

Finland’s total liability for the loan guarantee scheme is EUR 100 million, and were this to be exceeded, the EIB would cover the losses. If the losses from the scheme amounted to less than EUR 100 million, the unused funds would be returned to the State of Finland. In the Budget, Finland’s share in the scheme is divided between the Ministry of Economic Affairs and Employment and the Ministry of the Environment.