The Weekend Essays: Massive fossil fuels investment dereliction plannedPublished by MAC on 2019-11-15
One of Europe's most important financiers of fossil fuels has just declared it will eschew all such backing.
The European Investment Bank(EIB) - which provided a whopping £13. billion loan to the sector between 2013 and 2018 - is to develop a new "climate investment strategy" over coming years, claiming it to be the most ambitious such strategy of any public institution anywere.
Greeted by groups like Bankwatch, Counter Balance. and Friends of the Earth, as ground-breaking (ground "saving", one might say), the deal did not carry endorsement by all EIB members - in particular some from central and eastern Europe; while differences over support for related project, like gas, must still be determined.
All-in-all, the window of opportunity has now been opened, but all issues may take another thirty years to be resolved.
[Comment by Nostromo Research]
EU bank brokers late-night deal to phase out fossil fuels
By Sam Morgan
15 November 2019
The European Investment Bank (EIB) decided on Thursday (14 November) to
scrap financial support for fossil fuels from 2021, after marathon talks
ended in a compromise that has been hailed as “a significant victory”
for green policies.
It took an entire day of negotiations for sceptical countries like
Germany and Italy to sign up to the EIB’s ambitious review of its energy
lending policy, which is set to transform the EU lender into a
fully-fledged ‘climate bank’.
Under a compromise fleshed out during the talks, the EIB’s initial
proposal to scrub its loan books of fossil fuel projects by 2020 is
extended to 2021 in order to placate countries that wanted more
flexibility for gas projects.
It will mark a drastic change for the triple-A rated lender, which
according to figures compiled by NGO Bankwatch lent €13.5 billion to the
fossil fuel sector between 2013 and 2018
The extended negotiations paid off as Germany, which is one of the EIB’s
largest shareholders, eventually backed the updated policy, cancelling
out the negative votes of Hungary, Poland and Romania.
Berlin had originally threatened to abstain from any vote, after its
various ministries could not agree on a common position. That risked
another delay, after the bank cancelled a previously scheduled ballot in
Bank President Werner Hoyer said that “today [the EIB] 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.”
Vice-President Andrew McDowell, whose compromise tabled last week laid
the groundwork for yesterday’s deal, confirmed that “we have reached a
compromise to end financing of unabated fossil fuel projects, including
gas, from the end of 2021”.
The new policy will also increase the upper-limit of project financing,
currently set at 50%, to 75% for ten lower-income countries, in order to
address “specific energy investment challenges”.
All member states will be able to access that higher financing ceiling
for certain renewable energy projects, another compromise point that won
over some countries who flinched at the two-tier policy that had started
The bank will also increase its support for the European Commission’s
upcoming Just Transition Fund.
Extending the cut-off point for gas projects was key in securing the
blessing of the Commission, which had pushed back against the 2020 date
in order to shore up its own plans to push natural gas as a transition fuel.
In a statement, the Commission said it is “satisfied that the EIB Board
of Directors found an agreement on a transition arrangement for the
phase-out of gas projects, including vital interconnection and gas
McDowell had originally proposed that so-called projects of common
interest (PCIs) should be eligible for the 2021 deadline but that was
eventually rolled out to all fossil fuels.
Greenpeace campaigner Piotr Wojcik warned that “Europe cannot afford to
waste one more day or one more euro on fossil fuels. All fossil fuel
funding should be banned, including for fossil gas.”
Industry group Eurogas said the update “will support the deployment of
carbon capture and storage (CCS), power-to-gas, hydrogen and biogas.
Investments in gas infrastructure will deliver these technologies that
all support the achievement of the 2050 carbon neutrality target.”
Secretary-General James Watson added in a statement that: “Importantly,
the Bank will continue to support projects to deploy small gas boilers,
which help to improve air quality and reduce greenhouse gas emissions in
areas still using solid fuels or oil for heating.”
Exemptions in the new policy will allow continued funding for power
plants that emit less than 250g of CO2 per kilowatt/hour of electricity
generated, after the bank’s existing so-called emissions performance
standard was scaled back from 550g.
The new rules will also make allowances for low-carbon gases such as
biogas and hydrogen. Greenpeace insisted in a statement that a scheduled
review in two years “should provide the EIB with the opportunity to
close all remaining loopholes”.
Friends of the Earth Europe’s Colin Roche said that “today’s decision is
a significant victory for the climate movement” but that “2021 is still
too late if we are to avoid the worst effects of climate breakdown”.
A number of countries could not make their peace with the new policy
though and Cyprus, Estonia, Lithuania and Malta all abstained due to
lack of flexibility on gas. Austria and Luxembourg sat out the vote due
to what they perceived as a weak line on nuclear.
A piece of the climate puzzle
The Netherlands was a long-time backer of the EIB’s ambition though and
its EU representation hailed the agreement as “an important step to
achieve a climate neutral EU by 2050”.
At the December European Council summit, the Commission’s plan to slash
greenhouse gas emissions to a net-zero level will be back on the table.
Only the Czech Republic, Hungary and Poland are still yet to give the
strategy their blessing.
According to the 2050 plan, more than €500 billion will be needed every
year to decarbonise the entire EU economy by mid-century. The EIB now
claims its new policy will unlock €1 trillion in investments before 2030.
EIB Vice-President Emma Navarro also said “two weeks before the UN
climate change conference in Madrid, these decisions send an important
signal to the world: the EU and its bank commit to mobilise investments
on an unprecedented scale to support climate action.”
As the bank is one of the most respected and largest lenders in the
world, its policy direction is likely to be mirrored by other
money-houses. Bankwatch’s Anna Roggenbuck said that the EIB’s “laudable”
decision should mean “other international financial institutions should
The wheels for that may already be in motion. On 13 November, the
African Development Bank said it would not invest in a new coal power
plant in Kenya, while the European Central Bank is reportedly looking
into including climate change risks in its stress tests.
According to high-ranking EU officials contacted by EURACTIV, the EIB
decision could be the key that unlocks a number of other climate-related
issues, including the 2050 strategy, the ongoing long-term budget talks
and the soon-to-be-launched Green Deal.
Incoming Commission President Ursula von der Leyen has pledged to make
the Green Deal the foundation stone of her executive’s mandate and the
broad strokes of the policy are due to be presented on 11 December.
“For the EIB to stop funding fossil fuel projects is a game-changer that
begins to deliver the EU’s vision for climate leadership as laid out in
the Green Deal,” Eliot Whittington, director of the European Corporate
Leaders Group, told EURACTIV.
Von der Leyen is still struggling to get her Commission ready to take
power on 1 December as currently planned, after Hungary’s Commissioner
pick failed to convince the European Parliament and the United Kingdom
refused even to name a candidate.
But the EIB development does make it easier to fulfil one of the pledges
she made during her summer attempts to win support from MEPs for her own
candidacy: that of transforming the lender into a fully-fledged climate
Around 30% of the EIB’s activities can be considered green and the
revised policy makes the goal of increasing that figure to at least 50%
far more likely.
[Edited by Frédéric Simon]
World’s largest multilateral bank ends fossil fuels financing
Brussels, Prague — Bankwatch, Counter Balance and a growing number of
civil society groups have long been calling on the European Investment
Bank (EIB), the EU’s house bank, to recognise the urgency of stemming
the climate crisis and stop handing out public money to fossil fuel
projects. Today, November 14, the bank’s Board of Directors adopted a
new Energy Lending Policy that ends financing for most fossil fuels
Bankwatch press release -
14 November 2019
According to a Bankwatch analysis, between 2013 and 2018, the EIB
awarded the fossil fuels industry a total of EUR 13.5 billion – or EUR
6.2 million every day over this six year period.
The bank’s fossil fuels financing will end by 2021. From then on, the
EIB’s fossil fuels portfolio should be virtually zero.
People around the globe, and particularly young people, have been
mobilizing to demand governments take bold climate action. By no longer
wasting billions in European public money on fossil fuels, the EIB –
owned by the EU’s 28 Member States – is finally acknowledging its
responsibility towards future generations.
But if the EIB is to become Europe’s climate bank, as touted by incoming
European Commission President Ursula von der Leyen, it needs to swiftly
step up its support for energy efficiency and renewable energy projects
— not only in the richer Member States, but also in regions like Central
and Eastern Europe which have traditionally been dependent on fossil
fuels. This can be achieved through the proposed Energy Transition
Package. However, this instrument must be reinforced with concrete
measures to enable the needed energy transition in those regions.
Today’s landmark decision should also prompt other international
financial institutions – multilateral development banks in particular –
to immediately halt all support to the fossil fuels industry.
Two years ago, the World Bank pledged to cease funding for upstream oil
and gas after 2019, but it is yet to set a deadline for all fossil fuels
lending. The European Bank for Reconstruction and Development (EBRD)
continues to support the fossil fuels industry. It has invested in
equity in Romania-based Black Sea Oil and Gas, in bonds of several
fossil fuels companies in Ukraine, Bulgaria, Greece, Turkey, Egypt, as
well as in a number of gas grid projects like the Trans Adriatic
Pipeline, the Trans Anatolian Pipeline and the BRUA pipeline.
But the sun is setting on fossil fuels subsidies. Both the EBRD and the
World Bank should follow in the EIB’s footsteps and divest from fossil
Xavier Sol, Director of Counter Balance, said:
“This is a great step forward for the EIB – and an achievement for civil
society to celebrate. But given the bank’s commitment to align all its
operations with the Paris Agreement by the end of 2020, there are
serious challenges ahead for the EU’s bank. Firstly, it needs to
implement this new energy policy in a stringent manner and not allow
fossil gas projects to receive public funding. Then, it needs to update
its overarching climate strategy and stop financing carbon-intensive
transport modes, as it currently does. Civil society will keep a
vigilant eye on these upcoming challenges.”
Anna Roggenbuck, Policy Officer at CEE Bankwatch Network, said:
“This is a historical moment for the European Union. Its financial arm
denies further financing for fossil fuels projects as it found them
uneconomic and detrimental for the environment. It is laudable that the
EIB is the first international development bank to say ‘no’ to fossil
fuels. Other international financial institutions should follow suit.
Central and Eastern Europe will especially benefit from a dedicated
Energy Transition Package. The bank has finally acknowledged it must
enhance its support to the deployment of energy efficiency and renewable
For additional information please contact:
Policy Officer, CEE Bankwatch Network
Director, Counter Balance
+32(0)2 893 08 61