European Investment Bank to Stop Financing Fossil Fuels

solar tower
Gemasolar Thermosolar power station Cold salt is pumped up to the top of the tower at the central receiver, where it gets heated up by heat reflected upwards from an array of mirrors. The molten salt is carried back to the hot storage tank where it is stored at 565ºC. Salt from the hot storage tank is transferred to the heat exchanger through pipes and condensed to form steam. This steam is used to run the turbine and produce electricity. 2018 (Photo by Tony Hisgett)


KIRCHBERG, Luxembourg, November 19, 2019 (ENS) – The European Investment Bank will end financing for fossil fuel energy projects from the end of 2021, bank officials have announced. Future financing from the world’s largest international public lending institution will accelerate clean energy innovation, energy efficiency, and renewables.

“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.”

President of the European Investment Bank Werner Hoyer, 2017 (Photo by Raul Mee)

“The EU bank has been Europe’s climate bank for many years. Today it has decided to make a quantum leap in its ambition. We will stop financing fossil fuels and we will launch the most ambitious climate investment strategy of any public financial institution anywhere,” Hoyer said.

EIB Group financing will unlock €1 trillion of climate action and environmentally sustainable investment in the decade to 2030.

EIB Group will align all financing activities with the goals of the Paris Agreement from the end of 2020.

The Board of the European Investment Bank (EIB) November 14 agreed on the new energy lending policy and confirmed the European Investment Bank’s increased ambition in climate action and environmental sustainability.

EIB Vice-President Emma Navarro, in charge of climate action and environment, said, “To meet the Paris climate goals we urgently need to raise our level of ambition and this is precisely what we have done today.”

“Two weeks before the United Nations climate change conference in Madrid, these decisions send an important signal to the world,” Navarro said. “The European Union and its bank, the EIB, commit to mobilize investments on an unprecedented scale to support climate action projects around the world.”

“In addition, we commit to align all EIB Group activities with the principles and goals of the Paris agreement by the end of 2020,” Navarro said. “Any financing that is not green will be made sustainable, according to the requirements of the Paris deal.”

The new energy lending policy details five principles that will govern future EIB engagement in the energy sector:

* – prioritizing energy efficiency with a view to supporting the new EU target under the EU Energy Efficiency Directive

* – enabling energy decarbonization through increased support for low or zero-carbon technology, aiming to meet a 32 percent renewable energy share throughout the EU by 2030

* – increasing financing for decentralized energy production, innovative energy storage, and e-mobility

* – ensuring grid investment essential for new, intermittent energy sources like wind and solar as well as strengthening cross-border interconnections

* – increasing the impact of investment to support energy transformation outside the European Union.

solar tower
At the Gemasolar Thermosolar power station in Andalucia, Spain, cold salt is pumped to the top of the tower, where it gets hot from heat reflected up from an array of mirrors. The molten salt is carried to the hot storage tank where it goes to the heat exchanger through pipes and is condensed to form steam. This steam is used to produce electricity. 2018 (Photo by Tony Hisgett)

Andrew McDowell, EIB vice-president in charge of energy, said, “Carbon emissions from the global energy industry reached a new record high in 2018. We must act urgently to counter this trend.”

“The EIB’s ambitious energy lending policy adopted today is a crucial milestone in the fight against global warming. Following a long discussion we have reached a compromise to end the financing by the EU Bank of unabated fossil fuel projects, including gas, from the end of 2021,” McDowell said.

I am grateful for all those who have contributed to the largest ever public consultation on EIB lending in recent months and energy expert colleagues who have outlined how the EU bank can drive global efforts to decarbonize energy.”

Today’s decision ends an open and inclusive review process that involved industry, institutions, civil society, and the public at large. Intensive stakeholder engagement since January produced more than 149 written submissions from concerned organizations and individuals and petitions signed by more than 30,000 people.

Over the last five years, the European Investment Bank has provided more than €65 billion of financing for renewable energy, energy efficiency, and energy distribution.

Following the approval of its revised energy lending policy, the EIB will no longer consider new financing for unabated, fossil fuel energy projects, including gas, from the end of 2021 onwards.

In addition, the bank lowered its Emissions Performance Standard to 250 grams of the greenhouse gas carbon dioxide (CO2) per kilowatt-hour. This will replace the current 550gCO2/kWh standard.

A previous review of energy lending in 2013 had already enabled the EIB to be the first international financial institution to effectively end financing for coal and lignite power generation through the adoption of a strict Emissions Performance Standard.

Ten EU countries face specific energy investment challenges. The EIB will work closely with the European Commission to support investment by a Just Transition Fund.

The EIB will be able to finance up to 75 percent of the eligible project cost for new energy investment in these countries. These projects will also benefit from both advisory and financial support from the EIB.

The EU bank has been Europe’s climate bank for a long time. Since 2012, the EIB provided €150 billion of finance supporting €550 billion of investment in projects that reduce emissions and help countries adapt to the impacts of climate change. This made the EIB one of the world’s largest multilateral providers of finance for projects supporting these objectives.

On November 14, the EIB Board of Directors approved a new strategy for climate action and environmental sustainability, which includes three key elements:

* – The EIB Group will aim to support EUR 1 trillion of investments in climate action and environmental sustainability in the critical decade from 2021 to 2030;

* – The EIB will gradually increase the share of its financing dedicated to climate action and environmental sustainability to reach 50 percent of its operations in 2025 and from then on;

* – The EIB Group will align all its financing activities with the principles and goals of the Paris agreement by the end of 2020. In the near future, this will be complemented by measures to ensure EIB financing contributes to a just transition for those regions or countries most affected so that no one is left behind.

The European Investment Bank is the European Union’s nonprofit long-term lending institution established in 1958 under the Treaty of Rome. As a “policy-driven bank” whose shareholders are the member states of the EU, the EIB uses its financing operations to bring about European integration and social cohesion.

EIB President Hoyer, stressing the need for cooperation, said, “I would like to thank the shareholders of the bank, the EU Member States, for their cooperation over the past months. We look forward to working closely with them and with the EU Council of Ministers, with the European Commission, the European Parliament, international and financial institutions and, crucially, with the private sector, to support a climate-neutral European economy by 2050.”

Copyright Environment News Service (ENS) 2019. All rights reserved.


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