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European Investment Bank to phase out fossil fuel funding

The board of the European Investment Bank (EIB) has agreed a new energy lending policy which will see it end contributions to fossil fuel energy projects from the end of 2021 – thereby cementing its commitment to becoming the world’s first ‘climate bank’. 

The EIB believes that the change in its financing strategy will unlock €1tn of investment in the decade up to 2030, accelerating energy innovation, energy efficiency and renewables growth. The bank has also vowed to align all of its activities with the goals of the Paris Agreement from the end of 2020. 

Since 2013, the EIB has funded more than €13bn of fossil fuel initiatives. Last year it funnelled about €2bn into oil, gas and coal projects. Now, it has promised a ‘quantum leap’ in its ambition. 
‘Climate is the top issue on the political agenda of our time,’ said EIB President Werner Hoyer. ‘Scientists estimate that we are currently heading for 3–4°C of temperature increase by the end of the century. If that happens, large portions of our planet will become uninhabitable, with disastrous consequences for people around the world.’ 

The bank’s new energy lending policy details five principles that will govern future EIB engagement in the energy sector: 
  • prioritising energy efficiency with a view to supporting the new EU target under the EU Energy Efficiency Directive; 
  • enabling decarbonisation through increased support for low or zero carbon technology, aiming to meet a 32% renewable energy share throughout the EU by 2030; 
  • increasing financing for decentralised energy production, innovative energy storage and e-mobility; 
  • ensuring grid investment for new, intermittent energy sources like wind and solar as well as strengthening crossborder interconnections; and 
  • increasing the impact of investment to support energy transformation outside the EU. 
As the largest public bank in the world, the EIB’s new energy policy will add further weight to the global divestment movement, which has so far seen institutions such as the University of California and Norway’s Government Pension Fund Global remove fossil fuel investments from their portfolios.

However, the decision has arrived a year later than climate campaigners had hoped. Additionally, there are some fears from groups such as 350.org that the updated policy will include loopholes that could still allow funding for selected fossil fuel projects. The EIB will continue to fund any project added to the EU’s ‘projects of common interest’ list before 2022. This roster currently includes 50 gas projects that may be eligible. 

The week prior to the EIB’s announcement saw EU finance ministers call on all multilateral development banks – including the World Bank and the Asian Development Bank – to phase out fossil fuel financing.

News Item details


Journal title: Energy World

Organisation: European Investment Bank

Subjects: Funding

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