From the end of 2021, the European Investment Bank will no longer finance coal, oil and natural gas. A historic turning point, long awaited by institutions and civil society.
If the European Union truly wants to reduce its greenhouse gas emissions by at least 40 per cent by 2030, how can one of its main financial institutions continue to hand out billions for coal and oil? From 2021, this paradox will be resolved once and for all, thanks to the historic shift officially announced on 14 November by the European Investment Bank.
Established in 1958, the European Investment Bank (EIB) has the role of "providing financing for projects that contribute to achieving EU objectives, both within and outside the Union". In practice, it operates primarily across four areas: innovation, small businesses, climate and infrastructure.
In 2018 it disbursed financing worth 64.19 billion euros, which supported nearly 230 billion euros of investment: the EIB typically covers 50 per cent of a project's cost, giving it the solidity needed to attract other investors. The institution allocated 15.15 billion euros for environmental protection last year and 28 billion euros for renewable energy in the five-year period between 2013 and 2018. However, it has long been in activists' sights for its choice to also fund projects that are highly controversial from an environmental standpoint, such as the TAP pipeline.
It took considerable pressure from civil society, institutions and the general public — with a petition signed by more than 40,000 people and even an official statement from European Union finance ministers. But finally, after an initial postponement in mid-October, on Thursday 14 November the board of directors formally approved a new energy and climate strategy.
From the end of 2021, the EIB will no longer consider new financing for projects linked to fossil fuels, including natural gas. A new criterion tied to emissions performance (250 grammes of CO2 per kWh) has also been introduced, replacing the previous one of 550 grammes of CO2 per kWh.
The new strategy sets out three key commitments. The first is to support one trillion euros of investment in the environment and climate over the decade 2021–2030. The second is to raise the share of environment-related financing to at least 50 per cent of the total, from 2025 onwards. Finally, the group has pledged to align its activities with the objectives of the Paris Agreement by the end of 2020.
"Climate is at the top of the political agenda of our time," said president Werner Hoyer. "According to scientists' estimates, we are heading towards a temperature increase of 3–4 degrees Celsius by the end of the century. If this happens, large areas of the planet will become uninhabitable, with disastrous consequences for the global population."
"For several years the EIB has been Europe's climate bank. Today it has decided to take its ambitions to the next level. We will no longer invest in fossil fuels and we will launch the most ambitious climate investment strategy ever proposed by any public financial institution." He concluded by promising to work closely with European Union institutions, financial institutions and the private sector to support the transition towards a net-zero economy by 2050.
