European Bank Delays Lending Decision (Update)
(Adds comment from EIB at end)
The Luxembourg-based European Investment Bank (EIB) has caved in to pressure from Germany and the European Commission and deferred its decision to ban loans to fossil-fuel projects until mid-November, according to Bankwatch October 15.
In July 2019, the EIB came up with a first proposal for its new energy lending policy which featured a plan to stop support to fossil fuels by the end of 2020. "But since then, several EIB shareholders – the EU member states – and the European Commission have succeeded in watering down this proposal by expanding loopholes to this fossil fuels ban – allowing for more gas projects to be financed. Driven in particular by Germany, they have succeeded, following September's EIB Board meeting, in pushing the EIB to publish a weakened second draft," Bankwatch said.
Bankwatch said: "The EIB directors need to adopt a Fossil Free energy policy at their next meeting in November. As of 1st January 2021, the EIB should stop handing out public money to fossil fuels projects. Otherwise, the whole idea of turning the EIB into a climate bank will inevitably fall apart."
"The EIB president, Werner Hoyer, committed to align all the EIB operations with the Paris Agreement by the end of 2020. When announcing this plan to the European Parliament last week, he received significant support from most political groups. But if a weak energy policy is adopted, this objective will not be reached," said Bankwatch.
Counter Balance – another group that is part of the Fossil Free EIB campaign and a joint signatory of the statement – said the European Commission cannot on the one hand publicly promote its European Green Deal as a game changer and on the other object to climate commitments at the EU's financial arm. It's now time to act."
The EIB is to be the EU's climate bank, according to the European Commission president, Ursula von der Leyen in July. Germany is to become heavily reliant on gas as it phases out coal. There are several LNG import projects planned for its coastline.
The EIB told NGW that it could not comment on the details of the meeting but said the debate had been "very constructive" and that the bank was confident that the proposal would secure approval at the November board meeting. The EIB also pointed out that the September proposal on a new lending policy applied to projects that were related to unabated fossil fuels, such as natural gas without built-in carbon capture and storage, for example.
This also means that the bank "will have a clear position not to support upstream oil or natural gas production, coal mining, infrastructure dedicated to coal, oil and natural gas (networks, liquefied natural gas terminals, storage)," its amended text reads.
In its September draft, the EIB said that natural gas will be progressively replaced by low-carbon gases such as biogas, synthetic gas and hydrogen. This transition to low-carbon gas is a significant challenge to the industry. The bank will therefore focus its support within the gas sector on this issue, ranging from the production of low-carbon gases, transportation and distribution to integration within the power and heat sector. In the case of power generation, the GHG emission threshold is set at 250 grams/kWh of electricity generated.