Vice-President Beer: Water needs huge investment to prevent scarcity during climate change

Dear Ms Morgan, Ms Röstel, Mr Hannemann, ladies and gentlemen,

Safe water supply has been a key issue for the European Investment Bank for decades, so I am very pleased to have been invited to attend your annual meeting today.

You and your companies represent the highest standards of technological expertise, which is why we are keen to strengthen our existing partnerships with you - for a safe water supply in Germany, Europe and around the world.

We all know that water is life, but this well-known fact is unfortunately often overlooked.

The European Investment Bank has been one of the largest financiers of the global water sector since the early 1960s. Since then, we have put €86 billion into 1 770 water projects worldwide.

In the early years, the main focus was on building and upgrading water and wastewater infrastructure, but today our portfolio also includes projects in flood protection, erosion prevention, water production and desalination, new water technologies and watercourse restoration.

• In Germany, for example, we have been involved in restoring the Emscher River to its natural state for more than a decade. Once known as the "cesspool of the Ruhr," it is now one of the cleanest rivers in Europe.

Climate change will force us to invest even more in our water systems in the coming years than before.

Every year, the effects of global warming are being felt more strongly, including in Europe. According to a study by the Graz University of Technology, our continent has been suffering from a severe drought since 2018, interspersed with bouts of heavy rain and flooding.

Unlike in the biblical parable of the seven lean years and the seven years of plenty, these years of drought will not be followed by years of abundance as before. Climate models predict that droughts will only increase, and thus so too will the risks to health, agriculture and biodiversity, and the impact on electricity generation, shipping and European industrial production.

We've already seen how these effects can reduce German gross domestic product, for example with the extreme low levels of the Rhine in 2018, which weakened German economic output by 0.3 percentage points.

In an average year, 30% of people in Europe and 20% of regions are now experiencing water shortages. Droughts are already causing economic damage of up to €9 billion a year.

According to the European Environment Agency, the situation in large parts of Western and Southern Europe is set to deteriorate further in the coming years. To avoid social and economic upheaval, Europe needs to make its water infrastructure and management more sustainable.

But for us at the European Investment Bank this is not just an empty demand - we are also working very actively on solutions.

• Geographically speaking, the closest water project to here is a €400 million loan for Berliner Wasserbetriebe for the climate-conscious expansion of water supply and wastewater treatment in the growing metropolitan region of Berlin. The utility is investing €978 million here in total. We also need to make better use of rainwater - think sponge cities - in order to prevent sewerage systems from overflowing in the future after heavy rainfall, which regularly results in fish deaths in the Spree River.
• In Hamburg, we are investing €160 million in an innovation project for Hamburger Stadtentwässerung. It will see the construction of the world's first industrial-scale plant for phosphorus recovery from sewage sludge ash.
• And for two years now, we have been co-financing the multi-year investment programme of Zweckverband Bodensee, providing €260 million to this special purpose association to ensure the supply of water from Lake Constance to more than 300 municipalities, even as climate conditions change.

And we will continue to step up our commitment to the water sector in the coming years.

Just two weeks ago, our Board of Governors, the EIB's highest governing body made up of ministers from EU Member States, gave the green light to our strategic roadmap for 2024 to 2027. Climate action remains the number one priority, followed by digitalisation and innovation. As part of our roadmap there will also be a greater focus on water, especially where small and medium enterprises are involved.

Several years ago now, the EIB sought to become the EU climate bank. Since 2020, we have been following a climate roadmap that stipulates that at least half of our annual investment must contribute to climate action from 2025. We are already meeting this target today. In 2023, our climate action investments came to €49 billion, accounting for 60% of our total investment volume of €88 billion. We are also on track to achieve our second target of mobilising €1 trillion to finance green projects by 2030. Since 2021, we have already made €349 billion of investment in this area possible.

Let me explain a bit about what you can expect from us. The European Investment Bank is a bank. We raise funds on the capital markets on favourable terms due to our triple A rating. We pass this advantage on to our project partners by granting long-term, low-interest loans. But we don't just give the money away - all the projects we support must be financially and technologically sound. But that's also what sets them apart.

Projects generally need to be worth at least €100 million to qualify for EIB financing, in which case we can finance up to half of the amount. Our goal is to always involve the private sector. We finance smaller projects through multi-sector loans for private utilities and framework loan programmes with public and private banks and other investors. We also provide advisory services for project promoters, which of course includes the water sector.

Unlike other banks, we employ engineers, scientists and environmental experts in addition to financial experts to help us assess innovative projects in terms of their content too. Perceived as a seal of quality, the EIB's approval of a project often helps to draw in other investors.

I suspect that we are broadly in agreement here in the room that we need to invest more in climate adaptation and ecosystem restoration.

But we also need to think outside the box to see how we can learn from other industrial sectors and countries in order to better deal with the consequences of climate change.

I think it is also important to mention innovation and digitalisation here. Even more targeted efforts are required from representatives of public authorities and water companies to make the water sector more innovative.

We need to think about how we can efficiently use digitalisation and artificial intelligence for water infrastructure to build and operate our drinking water supply systems, sewerage systems, wastewater treatment systems, irrigation systems and flood protection systems in a smarter and more climate-resilient way.

One example of this might be the use of artificial intelligence to manage the storage capacity of combined sewer systems more efficiently.

At this point I'd also like to mention the issue of trace substances and micropollutants. The amendment to the EU Urban Waste Water Treatment Directive currently under discussion will have far-reaching consequences for water management in Europe. By the end of 2040, all major wastewater treatment plants will need to include a quaternary treatment stage to significantly reduce micropollutants such as hormones and pharmaceutical residues. Manufacturers of such products will be required to cover at least 80% of the costs of quaternary treatment. But public funds and innovative process technologies are also likely to be needed to meet these challenges.

The scientific and research community, and many innovative small and medium enterprises and startups, have developed innovative solutions that need to be better integrated into current infrastructure and planned long-term investments.

The previously mentioned new water programme of the EIB will pool and strengthen existing resources for investment in infrastructure and efficient water management technologies. Our goal is to promote climate action and help communities to adapt to floods, droughts and rising sea levels.

Beyond the European Union, the EIB Group cooperates with other multilateral financial institutions, such as the World Bank, the African Development Bank and the Asian Development Bank.

In line with EU strategy and the mandates we are implementing for the European Union, we are focusing investments on a limited number of strategic infrastructure projects, especially in Africa and Central Asia, in order to achieve the greatest impact on drinking water, irrigation and sanitation for millions of people.

• For example, the EIB is helping Djibouti in the Horn of Africa with a 25-year loan of €79 million. This will go towards a solar-powered desalination plant and a wastewater treatment plant that will supply almost half of the population with clean water.
• In the West African country of Benin, the coastline has been eroding at an increasingly rapid pace for the past 40 years as a result of urbanisation. The EIB has provided €125 million to support the expansion and rehabilitation of rainwater networks and roads in eight cities across the country. This will significantly reduce the risk of flooding, and lead to less standing water and a reduction in the associated health risks. And because the eight cities are all located on or near the coast, it also means that less plastic waste will end up in the Atlantic.

As you can see, the water sector is and will remain one of the key priorities for the EIB around the world.

You can continue to count on us as a reliable partner for financing and investment in the water sector. As industry representatives, we are keen to strengthen our partnerships with you in Germany and throughout Europe to ensure efficient cooperation and increased collaborative efforts, starting right now.

With that, let's now move on to what looks set to be an interesting and fruitful afternoon in the break-out sessions to follow.

Thank you.

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