The European Investment Bank (EIB) has announced that it will phase out all funding for fossil fuel projects by the end of 2021 and instead invest €1 trillion towards climate action over the next ten years.
Following an extensive review process, the EIB’s revised energy lending policy will aim to drive investment in clean energy innovation, efficiency and renewables in order to meet the goals of the Paris Climate Agreement.
The new energy lending policy details five principles that will inform future action: prioritising energy efficiency; enabling energy decarbonisation; increasing financing for decentralised energy production, innovative energy storage and e-mobility; ensuring grid investment essential for energy sources such as wind and solar; and increasing the impact of investment to support energy transformation outside of the EU.
The policy will see the bank work closely with the European Commission to support clean energy development in ten EU countries which face specific energy investment challenges. The EIB will be able to finance up to 75 per cent of energy project costs in these countries through a Just Transition Fund.
EIB President Werner Hoyer commented: “Climate is the top issue on the political agenda of our time. Scientists estimate that we are currently heading for three to four degrees of temperature increase by the end of the century. If that happens, large portions of our planet will become inhabitable, 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.”
“The beginning of the end”
Molly Scott Cato, Green MEP for the South West of England, has welcomed the move, having recently coordinated a letter signed by Greens/European Free Alliance colleagues calling on the EIB to shift its support from large-scale infrastructure to small-scale renewable energy projects and community cooperatives.
Commenting on the EIB’s announcement, Scott Cato said: “This marks the beginning of the end of public funding for fossil fuel investments by the EU’s largest bank. Greens have been highly critical of decisions by the EIB to invest in gas pipelines. Our repeated pressure is paying off and the bank is now on course to become a genuine climate bank.
“While a hugely significant step forward, the battle isn’t over. The climate crisis requires an immediate end to the funding of all fossil fuel infrastructure and the EIB must now review other lending policies that contribute to the climate crisis such as transport.
“While the EU is forging ahead, shaping a European economy that tackles the climate emergency, the UK is in deadlock over Brexit. Funds from the EIB will be essential for the UK renewables sector, which will be a key driver of the Green New Deal that will bring opportunities and thousands of new jobs to regions like the South West of England. The UK should now match the ambitions of the EU by establishing a domestic public bank to fund the transition to a sustainable economy.”
You can read the energy lending policy in full on the EIB website.