Focus sectors

In the Bank's reporting, the distribution of loans is presented according to sectors. Many projects relate to several sectors, particularly renewable energy, R&D and transport projects that represent both the environment and the other mentioned sectors. In order to reflect fairly the Bank's involvement in the different sectors, the reporting format was changed during the year so that for each loan the share of the relevant sector is presented as its weighted portion of the total amount. The new reporting format was also applied to loans agreed in 2009.

Environment

As described in more detail in the Mandate, Mission and Impact chapter, the Bank carries out a thorough assessment of all its loans, not only in order to apply appropriate safeguard procedures but also to identify projects that generate positive net environmental effects. Projects may represent end-of-pipe solutions where emissions are reduced through appropriate treatment facilities, but increasingly it is a matter of introducing cleaner technologies and better management of resource flows. Many projects have indirect positive environmental effects, for example, renewable energy projects which bring about emission reductions by replacing fossil fuels or projects aimed at reducing energy consumption in buildings through better efficiency.

The implementation and development of renewable energy systems and technologies is a focus area for NIB. All the member countries of the Bank have set ambitious and challenging targets to increase the share of renewable energy.

In 2010, new lending in the environmental sector totalled EUR 498 million, or 28% of all loans agreed. The environment remained the largest of the focus sectors. A major part of the agreed environmental loans were also related to other sectors as the projects represent investments in energy, transport, innovation, manufacturing and services that generate environmental benefits. The list of agreed loans indicates this overlap of sectors in the individual projects.

The projects financed by the Bank include investments in sustainable transport solutions, recycling, and energy efficiency in buildings. Renewable energy projects comprise wind power and hydropower systems. Other environmental projects include investments in R&D for more energy-saving industrial equipment and processes. The Bank also provided loans to banks for onlending to small and medium-sized companies and private households to finance investments in smaller-scale renewable energy and wastewater treatment.

Energy

Security of supply and environmental sustainability are key challenges for the energy sector in the Bank's member countries and beyond. Enhanced integration of regional energy transmission is a necessity, not least to enable a further increase of the share of renewable energy in the wider Baltic Sea region, and substantial long-term investments are needed in interconnectors and distribution systems. NIB has since the start of its operations been actively involved in financing the sector and is participating in the preparation of a number of priority projects. In 2010 the Bank adopted a lending strategy for its activities in the energy sector.

In 2010, the total share of energy loans was EUR 383 million, or 22% of all loans agreed during the year.

Loans were provided for investments in upgrading electricity transmission and distribution systems, including loans for the first project being implemented under the Baltic Energy Market Interconnection Plan.

Other loans to the energy sector included projects for renewable energy, improving the energy efficiency in buildings, modernisation of energy metering and more energy efficient industrial processes.

Transport, logistics and communications

Effective transport, logistics and communications are essential for the competitiveness of the Bank's member region. This applies to local and intra-regional transport and communication channels as well as to access links from and to the region. Environmentally sustainable, economic and long-term solutions are important. Investments in transport equipment, such as rolling stock, and in infrastructure such as roads and railways, are of a long-term nature, meaning the mobilisation of long-term capital is a prerequisite for such investments to materialise. In 2010 the Bank adopted a lending strategy which emphasises these aspects for its activities in the sector.

In 2010, 12% of all loans agreed belonged to projects in the transport, logistics and communications sector, totalling EUR 216 million. Approximately one third was directed to communications projects and the remainder to transport and logistics.

The projects in this sector include investments in railways and rolling stock, airport and road construction as well as the development of new generation broadband and mobile phone systems.

Innovation

This sector comprises various activities related to innovation processes. As NIB only provides senior loans on market terms, the participation of the Bank is limited to such projects that are able to carry loan financing. R&D projects form the predominant part of the Bank's portfolio in this sector.

In 2010, total lending was EUR 102 million for projects related to technology development, equalling 6% of all loans agreed during the year.