Division 5.3 Financial instruments

Funding, within the meaning of Article 17(4) of the LIFE Regulation, is foreseen for the following two pilot financial instruments for the purpose of achieving the general objectives set out in Article 3 of the LIFE Regulation:

• Natural Capital Financing Facility (NCFF) — a financial instrument being piloted under both sub-programmes in order to test and demonstrate innovative financing approaches for projects promoting the preservation of natural capital in the priority areas Nature and Biodiversity and Climate Change Adaptation.

• Private Financing for Energy Efficiency instrument (PF4EE) — a pilot financial instrument under the sub-programme Climate Action. As demonstrated during the period 2014-2017, PF4EE delivers a new and effective approach to address the limited access to adequate and affordable commercial financing for energy efficiency investments targeted by national priorities.

The provisions on financial instruments under the Financial Regulation, in particular Articles 139 and 140 thereof, are fulfilled as outlined in the following paragraphs.

Financial instruments supporting projects may take any of the forms referred to in, and shall be implemented in accordance with Title VIII of Regulation (EU, Euratom) No 966/2012 and may be combined with each other and with grants funded under the Union budget.

According to Article 140(6) annual repayments, including capital repayments, guarantees released, and repayments of the principal of loans, shall constitute internal assigned revenue and shall be used for the same financial instrument for a period not exceeding the period for the commitment of appropriations plus two years.

The mid-term evaluation took place after less than two years of effective implementation of the two financial instruments and only preliminary conclusions could be drawn from them for the financial instruments, as they represent a new way of funding under the LIFE programme. These conclusions have been taken into account for the implementation of the two financial instruments in the years 2018-2020. In particular:

• for the NCFF an effort is being made to improve the assistance to be provided to potential recipients for building up their business cases while considering that the funds assigned during the first MAWP are sufficient for the duration of the MAWP 2018-2020,

• for the PF4EE, it was decided to continue the pilot phase and to increase the available funds by EUR 75 million taking into account the high demand registered. The Commission will report at least on an annual basis to the LIFE Committee, while ad hoc meetings can be called if the need arises.