The European Investment Bank (EIB) today became the world's first public lender to commit to ending funding for coal, oil and gas.
In a major boost for climate action and the EU's green credentials, it agreed to stop providing loans to fossil fuel projects by 2021. Other public and private banks must now urgently follow suit.
The decision today follows months of discussions and in-fighting between Member States, who are the EIB Board members, particularly over whether or not to maintain funding for gas projects.
Tonight 19 EU Member States, including Germany, supported the policy. Three voted against because they wanted more flexibility on gas funding - Poland, Romania and Hungary - and six abstained. Of those six, Estonia, Lithuania, Malta and Cyprus did not vote due to a lack of perceived flexibility on gas, and Luxembourg and Austria abstained because they were against the inclusion of nuclear. Although the European Commission had pushed for more gas to be included, in the end it supported the proposal.
Sébastien Godinot, Economist at WWF's European Policy Office said:
"Hats off to the European Investment Bank and those countries who fought hard to help it set a global benchmark today. 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. The EIB itself must not make use of the exemptions in its energy policy that allow it still to finance some gas projects: it should focus exclusively on clean power sources like wind and solar. In this way, it will start morphing into the EU's Climate Bank."
What does the new EIB energy lending policy do?
Phases out all fossil fuel support by the end of 2021 - since 2013, the EIB has lent €13 bn to coal, oil and gas projects.
Integrates the Energy Efficiency First principle, coupled with a new building renovation initiative.
Proposes a new energy transition package, with the EIB proposing to give up to 75% financing to projects in Member States or regions with a 'more challenging transition path'.
It postpones the end of financing to gas projects until 2021, which opens a gap for billions of Euros to be lent to gas at a time when scientists tell us there is no more space in the environmental budget for fossil fuel emissions.
It allows further financing for any gas infrastructure that could potentially transport so-called 'green gas' in an undefined future. Given that 'green gas' is nowhere near being commercially available, there is a risk that fossil gas pipelines will still be financed with the excuse that they could one day be used for low-carbon gases.
It sets an emissions threshold of 250 grammes of CO2 per kilowatt, which is completely at odds with the 100 grammes threshold set by the EU's other central environmental regulation, the EU Taxonomy for Sustainable Investments (currently in trilogue negotiations). This is way too high, allowing efficient gas power plants still to be eligible.
The EIB must ensure that it ends gas funding once and for all, and put the EU on a path to climate neutrality. WWF calls on incoming EU Commission President Von der Leyen and Vice-President Timmermans to make this a priority for their mandate.
The European Policy Office helps shape EU policies that impact on the European and global environment.