Maritime Forum

A report on the potential for EU Blue Finance

Published on: Sat, 18/11/2017 - 14:39
Table of Contents
    executive summary - the actual report prepared for DG Mare by Torsten Thiele, Consultant, includes confidential analysis of individual project proposals and cannot be distributed,

    November 2017

     

    Context

    The Commission has assembled a pipeline of projects that could deliver in- novative new services and products to contribute to growth in the blue eco- nomy, with benefits to society. DG Mare asked for a preliminary and inde- pendent  assessment of possible options for providing the finance that would allow this to happen.  

    Introduction

    The EU plays a key role in promoting innovation and mobilising investment in the blue economy. Facilitating finance of blue growth requires a perspective that understands the needs of business, the requirements of equity investors and debt providers, as well as the emerging trends in the sustainable blue economy.

    Initial project pipeline

    A significant number of the projects in the present pipeline are in an early, re- search-driven stage which makes access to finance from the private sector on commercial terms difficult. Some projects show a clear path to market,are linked to a wider cluster or value chain and/or are backed by a business with a relevant financial track record. Given the wide variety of sources (10 processes with 339 individual projects), formats and lack of detailed financial information, further information will be required for any specific commercial investment decision.  

    Preliminary Assessment Approach

    In order to allow for a pragmatic way to identify immediate opportunities and next steps, a filter was applied to identify initial projects that  

    1. have reached some commercial readiness and maturity and would poten- tially be able to use growth finance effectively
    2. are well-positioned in key sustainable Blue Growth areas such as ocean energy, the marine bio-economy and coastal resilience  

    The study provides further detail as to the criteria, their context and their ap- plication to the project pipeline universe.

    Opportunities

    This triage work showed that the existing pipeline contains a relevant number of projects that could immediately benefit from access to finance as a way to deliver sustainable blue growth with quality jobs. An initial draft port- folio of 50 projects for investors was identified. The SME Blue Growth pipeline is in particular likely to generate commercially relevant leads. In terms of sectors the blue bio-economy, with opportunities ranging from seaweed to mariculture to marine biotech offers a wide range of investment opportunities. Beyond offshore wind other renewable marine energy technology investment options are emerging. Managing coastal spaces for clean water, livelihoods and tourism sustainably using integrated, data-rich approaches also provides new business opportunities.

    Investment Vehicles

    Achieving impact and commercial success will be more likely if the structures chosen do not only address specific project needs but link to existing formats for commercial finance. There are significant differences in terms of approaches between debt financing, with its strong emphasis on risk reduction, and equity and fund investors, looking for success targets. It is there- fore suggested that the chosen investment vehicle is aligned with the present national and local funding and support landscape. The study provides a number of examples. The nature of the proposed EU support, be it grants, risk sharing, blended finance or investment structures can then be appropriately targeted.

    Further Work Suggested

    Going forward, additional analysis is required to best target the financing of key blue growth opportunities. This would benefit from a dedicated financial platform that engages effectively with a broad range of financial market players. The project pipeline needs to be enhanced to include additional information to assess broader project risks as well as to how best to engage commercial investors. Sectoral and innovation priorities and growth prospects can be reflected and the calls for information be made widely available so as to encourage a wide range both of submissions from project sponsors as well as financial market participation. International issues beyond the EU should also be considered, as the EU turn its leadership role in the development of the Blue Economy into a global leadership in Blue Finance, integrating funding solutions with local, national and international partners and providing blue solutions specifically also to the developing world and for the global commons.

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