Blue growth investment needs and instruments in EU regions

11 July 2017, European Commission, DG MARE, J99, 00/53, 14.30 – 17.30

Introduction

Bernhard Friess highlighted the work carried out by the EU to promote innovation and mobilise investment in the blue economy. With regard to financing Blue Growth, DG MARE is increasingly developing a business perspective and looking into ways to facilitate funding for business ventures. This included assessing the substance and potential of investment opportunities/needs in different maritime activity areas/markets and gathering information on concrete project pipelines.

Eleni Marianou explained that the growing support for financial instruments suggests an increased use within the next MFF. The EU’s last reflection paper on the next MFF insists on an increased use of financial instruments which the CPMR supports, as long as it does not come with compulsory targets, imposed on the regions, as the CPMR believes that several maritime sectors are not tailored for financial instruments. There are clear financial needs, such as in particular, emerging maritime sectors are in need of considerable financial support, especially because infrastructure expenditure necessities increased the need for financial resources and private investors.

It is therefore worthy to discuss how, specifically, such combinations of FI and grants within the maritime sector can be prepared. In this regard, it should be noted that there are projects developed at regional level that do not meet the traditional award criteria (such as project size), which questions the ability of the EFSI to add value to small projects at local and regional level.

Round 1 – Investment needs and project pipelines

The main points highlighted in the discussions were as follows:

The discussions showed that Regions:

• Tend to cover a wide range of maritime activities (see chart in Annex);
• Develop processes to identify relevant projects (e.g. direct contact with companies, regional strategies, including RIS3). Examples of tools used to build project pipelines highlighted were:

• Regional Conference bringing together the banking sector, maritime clusters, associations of fishermen, industrial companies, universities and research labs;
• Blue Growth Innovation competition funded by the market;
• Maritime clusters bringing together a great variety of stakeholders;

• Identify communication and key enabling technologies as key to develop the maritime economy.

Round 2 - Investment obstacles and support measures

The main points highlighted in the discussions were as follows:

There was an agreement that financial instruments offer interesting opportunities, but cannot be the only solution. They must be paired with grants to build-up a business model.

Participating experts identified obstacles to the use of financial instruments, such as:

• EU support not in line with maritime sectors’ financing needs:
  • Restricted selection criteria in terms of size of projects, especially for SMEs to obtain the EIB’s support;
  • Complexity of EU rules;
  • Lack of dedicated instruments for blue growth, which means that maritime projects have to be supported by non-maritime funds where opportunities for Blue Growth are complicated to spot. Therefore, it is challenging for blue growth project holders to successfully apply to EU support;
  • Uncertainties/lack of expertise with regard to the implementation of the state aids regulation when using EU tools to support the activity of maritime SMEs;
  • An absence of adapted tools to help cross the “Valley of Death”;

• The capability of actors on the ground to use European financial instruments, due to:
  • Lack of knowledge about EU financing possibilities;
  • Lack of expertise;
  • Lack of links between SMEs and EU financial opportunities (need to create bridges to fill missing links);
  • Lack of commitment of banks, including the EIB, because of the level of uncertainty associated with some maritime activities;
• Challenges to connect with the private sector: big players playing by themselves, small companies lacking resources and knowledge to access EU support.

Discussions also highlighted that:

• Regional authorities can act as a guarantee linked with banks;
• Stronger and more efficient synergies between EU funds would offer new solutions;
• Exchange of best practices between Regions are important;
• Some Regional authorities use equity funds and Public Private Partnerships to support the demonstration phase of some strategic maritime projects;
• Regional authorities are developing various instruments, not necessarily 100% maritime, offering investment opportunities for the maritime sector. Similarly, most of them don’t rely on specific instruments to finance blue growth. Some Regions have established “fund of funds” in order to provide support in terms of financial engineering.

Round 3 - Current and future EU support

The main points highlighted in the discussions were as follows:

There was discussion and agreement mainly on two types of actions:

1) At European (trans-national/inter-regional) level there should be work towards:

• Setting up a dedicated fund(s) (or a Fund of Funds) to invest in Blue Growth projects to complement grants and provide more opportunities to address investment needs in particular smaller financing needs of Blue Growth SMEs.

Such funds would ideally be set up to cover projects within a particular sea-basin to link to existing macro-regional/sea-basin strategies.

Such fund(s) should be accompanied by providing technical assistance for project promoters/SMEs to access the fund.

And/Or:

• Enable more direct support from EU funds and the EIB to funds, or “funds of funds” at regional level. Some regions stressed that funds that are used at regional level to support blue growth projects do not need to be specific maritime funds. Other regions considered that specific blue growth funds would give a better chance of funding than the sector-agnostic funds that currently exist, where no level-playing field exists due to the absence of the specific appreciation/expertise needed for the blue economy.

2) At regional level, more effort would be needed to provide assistance and support on improving investability/bankability of projects through dedicated advisory services for Blue Growth SMEs or single-entry points of information on Blue Growth opportunities.

Other suggestions highlighted were:

• DG MARE will organise a dialogue with venture capitalists/financing institutions to pro-actively facilitate such dialogue;
• The creation of a European Innovation Partnership on Blue Growth (to bring together relevant actors from the Blue Growth community, e.g. industry, innovation agencies, ports, maritime clusters).

Identified needs and next steps

Need to know more about maritime projects that have the greatest potential for growth enhancing instruments

DG-MARE is developing a pipeline of bankable projects to present to potential public and private authorities. Participants to the meeting are urged to submit any that they are aware of through the following questionnaire:

https://ec.europa.eu/eusurvey/runner/blue_project_pipeline;

The CPMR is currently circulating a questionnaire on maritime investments among maritime Regions. Answers will be used to develop a report about regions’ views on the support to blue growth projects via EU financial instruments, which will be finalised in the autumn. All regions are invited to complete the questionnaire as soon as possible.

Need to answer to regions’ needs

DG MARE plans to ask a Financial Expert to help structure a funding platform concept and do due diligence on project pipelines to assess investment potential, in view of pitching it to EIB/investors. A service contract for such an expert could be launched as soon as possible by DG MARE with the aim to commence work in the autumn.

DG MARE will also launch a market study to analyse sectoral investment needs. This might include a separate analysis for a particular area such as the Baltic, building on a concept elaborated earlier this year with the EIF. DG MARE shall put specific emphasis on investments/Blue Growth financing at the 2018 EMD (possible follow-up workshop/discussion with regional actors).

DG MARE is also planning to publish an EMFF Call to fund a small number of demonstration projects that have to involve industry partners and that will test, deploy or scale-up new industry applications (based on enabling technologies) for the blue economy. The Call will be published as part of a wider package of Calls for a sustainable blue economy. For 2018, DG MARE is planning to notch this up even further to trigger private co-investment through a pilot programme for innovative projects.

Need to think about the future of EU funding tools

On 12-13 October DG MARE, together with the Estonian Presidency, will organise an event in Tallinn on “Beyond 2020: Supporting Europe's Coastal Communities”, to discuss how the EMFF is helping to support the implementation of the Common Fisheries Policy and Maritime Policy in the current programming period (2014-2020), and also to discuss challenges/opportunities for the future of the EMFF. The CPMR and regional actors will be involved as workshop speakers. One of the workshops will focus on financial instruments.

Need to maintain dialogue with the Regions

In the coming months, other opportunities for discussions will be provided. The CPMR will organise specific workshops on financial instruments and blue growth in the framework of, or back-to-back with, the Ocean Energy Europe Annual Event, the CoR Conference on Oceans and Regions which will take place on 21 November 2017 in Brussels, and the workshop organised with EMBRC-EMBRIC in early 2018 on marine biotechnologies.

The CPMR General Assembly (Helsinki, 18-20 October) will be an opportunity to summarise analysis on regions’ views on support to blue growth projects by EU financial instruments.

ANNEX

Areas of the maritime economy with the greatest need/potential/priority for growth-enhancing investments

Participants