Nowadays, countries and organisations around the world are putting in efforts to promote energy-saving and clean alternatives for fossil fuel-based energy systems. The Netherlands is also serious about mitigating CO2 emissions and adopting a circular economy, as it aims to become climate neutral by 2050.
In this regard, the city of Rotterdam, in collaboration with InnovationQuarter, has launched the Rotterdam Energy Transition Fund on Thursday. This fund has been set up to accelerate the local energy transition and boost the economy.
Rotterdam Energy Transition Fund
According to the press release, Rotterdam and its port are a cornerstone of the Dutch economy. However, as the region is responsible for 20 per cent of national CO2 emissions, it is a significant obstacle for the Netherlands who are on a mission to become climate neutral by 2050.
Bernice Notenboom (Climate journalist), Michael Liebreich (investor and founder of Bloomberg New Energy Finance), and city councillor for sustainability Arno Bonte came together to launch the Fund. The event was held on 3rd June and was hosted by BlueCity at the former Tropicana swimming pool building.
During the online launch of the Fund, speakers and panel members presented their views on the challenges facing the region and the opportunities for lowering CO2 emissions, improving air quality, and reducing the use of primary raw materials.
Purpose of this fund
According to a statement, the €100M Energy Transition Fund will accelerate the energy transition by investing in innovative businesses that drive change. It will also help the city recover faster from the coronavirus crisis.
Particular scale-ups can request for funds between €1M and €10M for projects that strengthen the circular economy and make energy generation, infrastructure, and usage in Rotterdam more sustainable. The projects include large-scale energy storage, electrification of industrial processes and transport, new technologies for recycling plastic, and creating an infrastructure for hydrogen.
Arno Bonte, Rotterdam city councillor, says, “In Rotterdam, we see abundant innovative strength. But we also see that companies often face a lack of appropriate funding to realise their business cases. The city council has therefore decided to establish the Rotterdam Energy Transition Fund. With investments from this fund, we can help innovative companies boost technologies that contribute to CO2 reduction and the circular economy in Rotterdam.”
Condition for fundraising
An important condition is that these innovative initiatives do not readily qualify for market funding. This could be due to risk profile, higher capital requirements or longer payback periods. The expected impact on the business climate and employment also plays a role in a successful investment application.
Rafael Koene, fund manager at InnovationQuarter, says, “As fund managers, we place a strong emphasis on whether a business can develop a technology that will make a substantial improvement to the world of tomorrow. In this respect, as an investor, InnovationQuarter has a long-term focus and an ongoing commitment. The Rotterdam Energy Transition Fund will particularly invest in innovative, capital-intensive companies that struggle to receive funding due to higher risks because of the technology, capital intensity or return on investment timescale.”
The Rotterdam Energy Transition Fund is a revolving fund: profits from investments flow back into the fund and can then be used for new investments.
An additional €30M
The Rotterdam Energy Transition Fund is part of the ‘Rotterdam, Onwards Stronger’ investment programme and is partially financed from the sales revenue of energy company Eneco. In addition to €100M for scale-ups, the fund contains €30M for owners’ associations, private individuals and SMEs. This is a revolving fund; profits from investments flow back into the fund and can then be used for new investments.
In the form of low-threshold loans, the fund stimulates various sustainability measures, such as home insulation and the installation of solar panels.
This part of the Rotterdam Energy Transition Fund is managed by SVn (Stimuleringsfonds Volkshuisvesting Nederlandse gemeenten). SVn has experience in the management of public investment resources to achieve social objectives.
Established in 2014, InnovationQuarter is the regional development agency for the Dutch province of West Holland. InnovationQuarter funds innovative and fast growing local companies, and helps transnational companies become established in this delta region.
InnovationQuarter also facilitates national and international collaboration between forward-thinking entrepreneurs, knowledge institutes and governments. By collaborating with the business community, the agency is helping to make West Holland one of the most innovative regions in Europe.
The agency invests in all types of financing including equity investments, subordinated and convertible loans for Seed, early-stage and growth companies. InnovationQuarter draws its investments from 4 funds. These include:
- IQCapital: an €80M fund that invests in startups, scale-ups and mature SMEs in West Holland
- UNIIQ: it is a €22M fund created by Erasmus MC, Delft University of Technology, Leiden University, and InnovationQuarter. It helps entrepreneurs bridge the riskiest phase, from concept to promising business
- ENERGIIQ: a €35M Province of South Holland fund to finance the commercialisation of proven energy innovations that lead to CO2 reduction
- The Rotterdam Energy Transition Fund: it has €30M available for loans to owners’ associations, private individuals and SMEs. Additionally, it also has €100M for sustainable investment in scale-ups and large organisations with the goal of reducing CO2 emissions and raw material usage and improving air quality