European finance ministers showed support for a draft European Investment Bank proposal to formally freeze fossil fuel financing on Friday. Library picture: A European Investment Bank building in Kirchberg, 21 July 2018. Photo credit: ricochet64/Shutterstock.com
The European Investment Bank’s proposed energy lending policy change to ban the financing of fossil fuel projects is inching forward.
EU finance ministers endorsed the switch during an Ecofin meeting in Brussels on Friday.
“Urges multilateral development banks (MDBs) as well as national and regional development banks to set out the measures they are undertaking to align their portfolios with the Paris Agreement and continue to scale up climate-related investments, building on the significant progress made in 2018, whilst using their resources more innovatively and effectively to further leverage private finance and to ensure compatibility of new projects with the Paris Agreement.”
The statement said the European Council:
“Welcomes the European Investment Bank Group’s ambition to increase its contribution to climate action and environmental sustainability.”
And EU finance ministers want:
“… MDBs to adopt responsible investment policies and to phase out financing of fossil fuel projects, in particular those using solid fossil fuels, taking into account the sustainable development, and energy needs, including energy security, of partner countries.”
The draft “EIB energy lending policy” released in July would “phase out support to energy projects reliant on fossil fuels” by 2020. The move would support EU climate change targets and free up financing for green energy projects.
The plan was formally presented to the EIB’s board of directors (made up mostly of those very same EU finance ministers) during its 10 September meeting and debated during its 15 October meeting, but the board remained divided over the classification of natural gas.
The matter is due to be taken up again during the bank’s board meeting on 14 November, but talks are likely to extend to at least its board meeting on 12 December, an EIB official told Delano on Thursday.
The EU development bank lent €1.83bn for fossil fuel projects last year and a total of €13.4bn since 2013, said the official, who was not authorised to speak on the record. This figure has been on a downward path, from an average of €2.5bn annually between 2013 and 2015 to an average of €1.7bn annually between 2016 and 2018. Altogether the bank provided €10.2bn for energy-related projects in 2018, including energy efficiency initiatives.
According to its 2018 annual report, the EIB and its sister European Investment Fund issued a total of €64.2bn in financing last year.
While the bank does not currently have an official ban on financing fossil fuel projects, it stopped supporting coal and oil extraction in 1999, and coal and oil fired power generation in 2013, the official stated.
The EIB has lent to only one gas production project since 2013, according to the official. The vast majority of recent fossil fuel financing has gone to natural gas transmission and distribution programmes, with a small percentage backing combined heat and power facilities.
The environmental activist group Greenpeace has been lobbying the EIB to institute the ban.