The European Investment Bank will stop lending to fossil fuel projects, including gas, from the end of 2021.
The EIB confirmed the move last week in what its president, Werner Hoyer, described in a statement as a “quantum leap” for the institution. Measures taken by the bank in 2013 had already ensured it would no longer fund coal-fired projects, although the halting of lending for gas will represent a significant step change for the bank, with the plans also ending support for gas transmission infrastructure.
The EIB had initially proposed in July to end finance for fossil fuels by the end of next year, but opposition from some EU member states meant this was pushed back by a year. The EIB directed about €2 billion towards fossil fuels in 2018. Overall, €13.4 billion has been spent by the bank on mostly gas projects since 2013.
“Following a long discussion, we have reached a compromise to end the financing by the EU Bank of unabated fossil fuel projects, including gas, from the end of 2021,” confirmed Andrew McDowell, the EIB’s vice-president for energy, in a statement.
The new measures establish a new emissions standard of 250g of CO2 per kilowatt hour, replacing the previous standard of 500g. The EIB noted that it will refocus its efforts towards having environmental and climate finance reaching 50 percent of its funds by 2025, with the aim of stimulating €1 trillion of related investment by 2030.
Increased support will be provided to low carbon technologies as the bank aims to meet the 32 percent renewables target by 2030 set by the European Commission last year. Efforts will also be more focused towards decentralisation, energy storage and e-mobility, in addition to strengthening existing grids and interconnection.
The EIB said 10 EU countries face “specific energy investment challenges”, adding that it will work with the European Commission to address these through the EIB’s upcoming Just Transition Fund. The EIB will be able to finance up to 75 percent of the cost for new energy projects in these countries. It did not name these countries or which specific challenges they faced.