Friday

12th Aug 2022

Opinion

The EU investment bank's big chance to go green

  • An anti-fossil fuels protest in Oxford, calling for divestments (Photo: Kamyar Adl)

The European Investment Bank (EIB) proposed in July this year to put an end to its years-long fossil fuels financing.

The bank is currently revising its energy lending policy, and the official draft policy suggests the bank will cease support for upstream oil and gas production, coal mining, infrastructure dedicated to coal, oil and natural gas (networks, liquefied natural gas terminals, storage) and power or heat generation from fossil fuel sources.

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The bank's board of directors – made up of EU governments' representatives – must not hesitate and back the proposal.

Adopting it will effectively turn the EIB into the real 'EU Climate Bank' many, including the new European Commission chief Ursula von der Leyen, have recently been talking about.

Not only will the EIB become the first public international financial institution aligned with the Paris Agreement, such an unprecedented move could also help stimulate the much needed energy transition in central and eastern Europe, where governments have long been resisting it.

In the first stage of this phase out, immediately after the policy approval, the EIB would stop accepting new loan requests for projects in energy infrastructure directly associated with fossil fuels, and by the end of 2020 the bank will stop financing such projects altogether.

The bank explains there is no need for it to continue supporting fossil fuels investments which can be financed from other sources. Instead, it proposes to focus its financial support on renewable energy and energy efficiency.

The draft policy is especially beneficial for central and eastern Europe but could be further improved.

Shameful track record

The EIB has had a shameful track record in dirty energy finance, but it now wants a fresh start.

The draft policy proposes an Energy Transition Package to provide extra support for energy transition in Bulgaria, Czech Republic, Estonia, Croatia, Latvia, Lithuania, Hungary, Poland, Romania, Slovakia and Greece's islands.

The scheme would collate finance and advisory services for both energy and non-energy projects in the regions economically dependent on fossil fuels.

However, only energy projects might be financed up to 75 percent by the EIB low-cost loans. Allowing for an increased EIB's contribution to all investments in the eligible regions could on one side accelerate their economic development but also help to ensure acceptance for the proposed policy from the countries who in the fear of unfavourable economic impact of the proposed fossil fuel ban might reject the draft policy.

CEE Bankwatch network, along with many European organisations, has long been campaigning for a fossil free EIB. We exposed the bank's notorious contribution to the climate crisis.

In early 2018 the EIB approved a controversial €2.4bn loan to Southern Gas Corridor, a gigantic fossil fuels project which already in its first stage will cause additional annual greenhouse gas emissions of at least 55000 ktCO2eq – an amount comparable to the annual emissions of Bulgaria.

We have also called on the bank to step up climate finance in central and eastern Europe where it has so far been rather marginal.

At long last, the EIB's proposed energy lending policy recognises the urgent need to ensure such projects never get European public money again.

The policy will now have to be backed by the member states and the European Commission . On Tuesday (10 September 10), their representatives on the bank's board will meet to discuss the draft policy.

They should endorse the bank's proposal for the EU to finally have the climate bank it deserves.

Author bio

Anna Roggenbuck is European Investment Bank policy officer for NGO Central and Eastern European Bankwatch.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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