The European Investment Bank is positioning itself as the world’s first “climate bank” by phasing out its investments in fossil fuels over the next two years.
After 2021 the EU’s lending arm will no longer finance projects related to coal, gas, and oil. The decision will see the bank become the first lender to refuse to fund endeavours that contribute to climate change.
The move will be a crucial component in achieving the EU’s goal of reaching carbon neutrality by 2050, with Green groups welcoming the change.
The bank called its decision a “quantum leap” in terms of ambition, with the bank’s president Werner Hoyer saying that “climate is the top issue on the political agenda of our time”.
“We will stop financing fossil fuels and launch the most ambitious climate investment strategy of any public financial institution anywhere,” he added.
Speaking on the decision, Andrew Mcdowell, vice-president of the EIB, said it was “an important first step – not the last step, but probably one of the most difficult.”
The bank is aiming to have all its funding choices align with the Paris climate agreement within two years. All new energy projects seeking funds from the EIB will need to prove that they can produce less than 250 grammes of carbon dioxide for every kilowatt hour of energy produced.
The prioritisation of clean energy follows a pledge by Ursula von der Leyen - incoming European commission president - to turn the EIB into a “climate bank”, freeing up a potential €1tn in funds towards clean energy for the European economy.
Friends of the Earth Europe’s Colin Roche described the move as “a significant victory”, saying “finally, the world’s largest public bank has bowed to public pressure and recognised that funding for all fossil fuels must end – and now all other banks, public and private, must follow their lead”.
Environmental thinktank E3G’s Nick Mabey echoed the same sentiment in a statement: “Europe is sending a clear signal that it intends to move away from fossil fuel investments toward the climate-neutral future its citizens want. The EIB is sending a message to other financial institutions that investment in fossil fuels is drawing to an end.”
However, some are still sceptical about the effect the move will have on the fossil fuel industry. Oil Change International’s Alex Doukas highlighted the hold that the industry still has on politics in the EU:
“Gas lobbyists were able to convince many parties – most significantly Germany and the European commission – to override public support for a fossil-free EIB and write significant concessions into this policy.
“However, with people-powered movements for climate action stronger than ever, the gas industry will face an uphill battle in using these EIB loopholes to get new projects funded by 2021.”
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