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EU signals clamp down on future fossil fuel developments
The European Union (EU) Council of Ministers has signalled that it is prepared to clamp down on EU funding of oil and gas projects, as it considers how to achieve anticipated new ambitious climate change goals, writes Keith Nuthall.
In a joint policy statement released in early November, EU ministers said multilateral development banks should ‘adopt responsible investment policies and phase out financing of fossil fuel projects, in particular those using solid fossil fuels’. The declaration is important, given EU Member States control the European Investment Bank (EIB), which has sunk €202bn into energy projects since it was founded in 1959, many of which involved developing the oil and gas sector.
While the EU statement does allow for some wriggle room, given it says development banks should take ‘into account the sustainable development and energy needs, including energy security, of partner countries’ when assessing investment projects, the detailed policy declaration is clearly opposed to the expansion of fossil fuels. It declares: ‘Carbon pricing and phasing out environmentally harmful and economically inefficient subsidies are key components of an enabling environment for shifting financial flows towards climate-neutral and sustainable investments.’
The statement comes as the incoming European Commission of President-Designate Ursula von der Leyen is to, by March 2020, propose a new package of legislative and policy measures targeting deeper greenhouse gas (GHG) emissions cuts called the ‘European Green Deal’. This position is important, given EU Member States have strong influence over the policies of the European Bank for Reconstruction and Development (EBRD) and the World Bank.
The policy statement said that international, national and regional development banks should ‘align their portfolios’ with the Paris Agreement on climate change and ‘continue to scale up climate-related investments’. It added that the EU would also continue to ‘to scale up public finance’, helping non-EU countries boost their resilience to climate change and increase the sustainability of their economies.