European Investment Bank, Cepsa sign $305 million loan to finance construction of renewable diesel, SAF plant

The European Investment Bank announced June 27 that it and Cepsa have signed a 285-million-euro (USD$305.3-million) loan agreement for the construction of an advanced biofuels plant to be located next to the La Rábida Energy Park in Palos de la Frontera, Andalusia, Spain.

The plant, which Cepsa is building together with Bio-Oils, will produce sustainable aviation fuel (SAF) and renewable diesel from organic waste such as used cooking oil or from agricultural waste, advancing the circular economy.

Once operational, the facility is expected to process as much as 600,000 metric tons of waste and produce up to 500,000 tons (approximately 165 million gallons) of second-generation biofuels annually.

The biofuels will serve industries such as aviation, maritime transport and even heavy-duty road transport for which decarbonization and electrification pose challenges.

Biofuels are an immediate solution to reduce CO2 emissions from this sector, without making changes to existing engines.

“This loan is a clear example of how the EIB promotes the energy transition also in hard-to-abate sectors,” said Gilles Badot, director of EIB operations for Spain and Portugal. “This project will contribute to make Spain one of the leading countries in the production of biofuels. Supporting private companies like Cepsa, which are investing in this transition and advancing their own decarbonization strategies, is one way the EIB is accelerating the transition to a more sustainable energy model that promotes EU energy autonomy.”

The investment by Cepsa and Bio-Oils will be made entirely in Andalusia, a cohesion region where per-capita income is below the EU average.

Given the project scope, it is expected to have a positive impact on the local economy by boosting growth and job creation.

As a result, the loan signed with Cepsa makes a significant contribution to the EIB’s commitment to economic, social and territorial cohesion.

“We are grateful for the EIB’s support to this project, which is key to our Positive Motion strategy and to Spain’s and Europe’s progress towards the necessary energy independence,” said Cepsa CEO Maarten Wetselaar. “This plant will enable us to take a giant step forward in the production of green molecules, with the aim of facilitating the immediate decarbonization of land, sea and air transport by reducing CO2 emissions by up to 90 percent compared with traditional fuels.”

This project supports the decarbonization objectives of the European Green Deal.

It is also part of the EIB’s action plan to support REPowerEU in ensuring energy security and reducing EU dependence on fossil-fuel imports.

The project is supported by InvestEU, an EU program to mobilize more than 372 billion euros (USD$398.6 billion) of additional investment in the period 2021-’27.

It furthers one of the program’s main objectives: developing the energy sector and the sustainable bioeconomy.

With this new arrangement, the EIB is continuing to support Cepsa’s decarbonization strategy.

It is the third financing operation with Cepsa in the past two years to accelerate this strategy.

The previous two were a loan of 80 million euros (USD$85.7 million) for photovoltaic plants in Andalusia and a loan of 150 million euros (USD$160.7 million) for Cepsa’s network of electric charging stations in Spain and Portugal.

In 2023, the EIB Group provided more than 21 billion euros (USD$22.5 billion) in financing for energy security in Europe.

In the same year, it allocated 4.5 billion euros (USD$4.8 billion) to this goal in Spain, financing projects in areas including renewable energy, energy efficiency, power grids and storage systems.

These investments are helping Europe speed up its transition to sustainable energy and reduce its reliance on fossil-fuel imports.

In July 2023, the EIB board of directors raised the amount earmarked for REPowerEU projects to 45 billion euros (USD$48.2 billion).

REPowerEU is the plan designed to end Europe’s dependence on fossil-fuel imports.

To boost financing for the EU manufacturing industry, the EIB will also expand the range of eligible sectors to include leading strategic technologies with net-zero carbon emissions, as well as extraction, processing and recycling of critical raw materials.

The additional financing will be disbursed between now and 2027.

In total, it is expected to mobilize more than 150 billion euros (USD$160.7 billion) in investment in the target sectors.