UniCredit Bank Serbia launched a €43mn credit line backed by German development bank KfW and the European Union to finance energy efficiency and renewable energy projects for Serbian businesses and parts of the public sector, the lender said on July 22.

The facility lands as Serbia works to bring its energy sector into line with EU rules, a requirement of its accession bid, while companies face rising power costs and an electricity system still heavily dependent on coal. Belgrade has come under pressure to cut emissions ahead of the EU's carbon border levy, which will place tariffs on imports from high-carbon producers.

The credit line forms part of the Low Carbon Energy Facility, a €47.3mn package comprising the €43mn loan and a €4.3mn EU grant channelled through the Regional Energy Efficiency Programme. KfW is providing the funding with support from Germany's Federal Ministry for Economic Cooperation and Development.

UniCredit Bank Serbia is acting as partner bank. Financing is open to small and medium-sized enterprises and to larger companies with up to 1,000 employees.

Borrowers can take loans of up to €1mn carrying a 10% grant component. Financing can rise to €3mn per borrower with KfW approval.

Eligible measures include energy efficiency upgrades, rooftop solar installations, conversion to lower-carbon fuels such as biomass and biogas, and other emissions-reduction projects.

"Companies that invest in energy efficiency and renewable energy sources today do not only solve the issue of costs, but build sustainable business models," said Nikola Vuletic, president of UniCredit Bank Serbia's executive board.

The programme runs until 2028 and is expected to reach around 300 companies. It is projected to cut annual energy consumption by about 34,000 MWh and carbon dioxide emissions by roughly 24,000 tonnes a year.