Top EU bank will stop funding fossil fuel projects from 2021

Clay Curtis
November 17, 2019

The European Investment Bank (EIB) said on Thursday that it would stop funding fossil fuel projects at the end of 2021.

Germany, which was instrumental in watering down the first proposed policy, continued to earn opprobrium from climate change campaigners for its continued moves to save gas projects. As a part of this effort, the European Central Bank's (ECB) new president, Christine Legarde, has also promised to direct the ECB to focus more closely on climate-related risks in its stress tests for banks.

In comments following the decision, Nicholas Browne, research director at energy consultancy Wood Mackenzie, warned that the gas sector may not be able to rely on arguments promoting the combustion benefits of gas vs. coal and oil.

"However, with people-powered movements for climate action stronger than ever, the gas industry will face an uphill battle in using these EIB loopholes to get new projects funded by 2021". All public and private banks must now follow suit and end funding of coal, oil and gas to safeguard investments and tackle the climate crisis.

"We will stop financing fossil fuels and we will launch the most ambitious climate investment strategy of any public financial institution anywhere".

"This is an important first step - this is not the last step", the EIB's vice president, Andrew McDowell told reporters in a call.

Over the last five years, EIB has provided more than Euro 65 billion of financing for renewable energy, energy efficiency, and energy distribution.

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It also revealed it will work towards ensuring grid investment essential for new, intermittent energy sources like wind and solar as well as strengthening cross-border interconnections and increasing the impact of investment to support energy transformation outside the EU.

"Climate is the top issue on the political agenda of our time.The EU bank has been Europe's climate bank for many years".

The ban will come into effect a year later than originally proposed after lobbying by European Union member states.

The European Investment Bank, the world's largest multilateral lender, had been criticised by climate groups for funding gas projects that potentially threatened the EU's commitment to the Paris climate goals.

A decision on fossil fuel funding was planned already last month, but was postponed due to divisions within the bloc.

Late past year, the World Bank announced a partnership with Canada and the United Kingdom to provide financing and technical support to developing countries "that have made a decision to transition away from coal and accelerate the uptake of cleaner sources of energy".

The EU executive estimates that high rolling friction can increase fuel consumption by up to 30 percent and more efficient tires could have the same effect as 4 million fewer cars on the roads. The bank allegedly wants to "set the standard" for what it meant for banks to be in agreement with the Paris climate agreement. "The gas lobby has unfortunately managed to get Germany and the European Commission to insert some loopholes into the policy, which leave the door open for funding of unsafe fossil gas projects." said Kate Cahoon, Germany Campaigner, 350.org.

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