European Investment Bank To Cease All Fossil Fuel Lending Come 2022
- Nov 15, 2019 9:28 am GMTNov 15, 2019 9:15 am GMT
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EIB, the European Investment Bank, will cease lending for fossil fuel projects come 2022, freeing up some EUR 1 billion of climate action and environmental capital to increase financing for clean energy innovation, energy efficiency and renewable energy. Looking further ahead, EIB intends to ramp that up to EUR 1 trillion by 2030, the first multi-lateral development bank to do so.
EIB's board of directors today agreed to a new energy lending policy and confirmed its increased ambition regarding climate action and environmental sustainability. That includes aligning all its financing to support achievement of the U.N. Paris Agreement, the first of the world's multilateral development banks to do so.
“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 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.”
No more EIB fossil fuel lending
The bankers laid out details of the five guiding, new energy principles that are to govern new policy agreement:
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% 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 EU.
EIB has financed more than EUR 65 billion of renewable energy, energy efficiency, and energy distribution projects to date. Following institution of the new energy policy, "EIB will no longer consider new financing for unabated, fossil fuel energy projects, including gas, from the end of 2021 onward," according to a press release. Furthermore, the bank set a new Emissions Performance Standard of 250g of CO2 per Kilowatt/hour (Kw H). to replace its current 550gCO2/KWh standard. That upgrades a previous review of energy lending in 2013 had made EIB the first international finance institution to effectively end financing for coal and lignite power generation zero-carbon and environmental lending and actions.
A big boost for zero-carbon energy and climate change financing and actions
In charge of climate action and environment, EIB Vice-President Emma Navarro 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: 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. Any financing that is not green will be made sustainable, according to the requirements of the Paris deal.”
Werner stressed the need for cooperation in order for EIB to achieve its goals and pull the European Union (EU) and countries worldwide make the transition to a low- or zero-carbon world and avoid the worst effects of climate change. “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.”