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EU could lighten capital requirements for banks investing in green projects

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EU could lighten capital requirements for banks investing in green projects

An influential member of the European Commission has suggested that the EU's executive body could lower capital charges for banks making eco-friendly investments.

Valdis Dombrovskis, the EC's vice president for the euro, said at a conference in Paris that such a move could involve "lowering capital requirements for certain climate-friendly investments, such as energy-efficient mortgages or electric cars." He noted that the EU already gives banks a discount on capital requirements for exposure to certain small and medium-sized enterprises and said the green discount could be modeled on that approach.

Europe needs around €180 billion in additional yearly investment to power the transition to clean energy and reach our 2030 Paris agreement targets," Dombrovskis said in an EU news release. "Europe's financial sector should be given the opportunity to lead this effort worldwide."

The same day, Norway-based Storebrand ASA unit Storebrand Asset Management launched a $1.3 billion fossil-fuel-free bond fund, called Storebrand Global Kreditt IG, which will be used to buy corporate bonds in developed countries. Meanwhile, France's Axa is eyeing €12 billion of investments in green projects by 2020 and €3 billion of disinvestment from the coal and oil industries, and Dutch lender ING Groep NV said it would accelerate the reduction of its financing to coal power generation, aiming to reach "close to zero" by 2025.