EU’s Lending Arm Plans to Phase Out Fossil-Fuel Funding
EU’s Lending Arm Plans to Phase Out Fossil-Fuel Funding
(Bloomberg) -- The European Investment Bank plans to stop funding fossil fuels starting in 2021 as Europe steps up the fight against climate change.
The Luxembourg-based EIB, the European Union’s lending arm, aims to increase support for clean-energy projects as the EU crafts stronger policies to counter the more frequent heat waves, storms and floods tied to global warming. Fossil fuels such as coal, oil and natural gas are leading contributors to climate change.
“The bank will phase out support to energy projects reliant on fossil fuels: oil and gas production, infrastructure primarily dedicated to natural gas, power generation or heat based on fossil fuels,” the EIB said in a strategy paper published on Friday. “These types of projects will not be presented for approval to the EIB board beyond the end of 2020.”
The EIB, which has invested in the energy industry for the past six decades, is gearing up to play a bigger role in spurring low-carbon technologies because the EU is pushing to enact the landmark 2015 United Nations agreement to fight global warming after the U.S. turned its back on the accord.
Ursula von der Leyen, the incoming president of the European Commission, the 28-nation EU’s executive arm, vowed last week to turn parts of the EIB into a “Climate Bank” in a bid to unlock 1 trillion euros ($1.1 trillion) of investment over the coming decade.
The EIB’s financing of climate-action projects amounted to 16.2 billion euros last year, or 30% of its lending, according to the bank.
In the new lending plan, which the EIB’s board is due to discuss in September, the bank pledged to create an “energy transition package” that would provide extra support for EU countries or regions such as those in formerly communist eastern Europe still relatively dependent on fossil fuels.
“This draft shows commendable leadership from the EIB in becoming the first among public banks to commit to a total phaseout of investments in fossil fuels after 2020,” said Petr Hlobil, campaigns director at Prague-based CEE Bankwatch Network, which monitors development finance in eastern Europe.
To contact the reporters on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net;Ewa Krukowska in Brussels at ekrukowska@bloomberg.net
To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, ;Reed Landberg at landberg@bloomberg.net, Peter Chapman, Richard Bravo
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