The European Investment Bank will stop funding unabated fossil fuels from the end of 2021 and prioritise energy efficiency – a year later than planned.
The deal represents a compromise. The EIB had hoped to stop funding fossil projects by the end of 2020.
The bank reviewed its energy policy earlier this year but had to convince some member states, which make up its board, that proposals to end the approval of financing for fossil fuel projects in Europe were in their interests.
The negotiated agreement essentially means no more finance for fossil gas generation and networks – at least those without measures to capture emissions.
Speaking at an InnoEnergy conference in Paris last month, EIB vice president, Ambroise Favolle, said gas projects were “well developed in Europe and [developers] can find the money.” The EIB, he said, “needs to be there when there are most difficulties to finance projects.”
As such, it aims “to become the climate bank of the EU”. However, he said the EIB will still assess gas projects that are in the pipeline until that cutoff.
Energy efficiency, said Favolle, deserves to be a key focus for lending alongside storage and renewables, “and we feel this is where we are most useful”.
Announcing its decision yesterday, EIB vice president in charge of energy, Andrew McDowell, said the bank “had reached a compromise” with member states to stop funding unabated fossil projects from the end of 2021.
He said the agreement represents a “quantum leap” in the EU’s ambition. “We will stop financing fossil fuels and we will launch the most ambitious climate investment strategy of any public financial institution anywhere,” added McDowell.
The bank’s strategic lending priorities include:
- energy efficiency
- low or zero carbon technology
- decentralised energy production, storage and e-mobility
- energy grid investment
The EIB has also set a new emissions performance standard of 250g/Co2/kWh, down from 550g.