COP26: European Investment Bank defines highly innovative project funding for fossil firms

The European Investment Bank will make funding exemptions for highly innovative low-carbon projects being developed by oil and gas companies, the bank's Vice President Ambroise Fayolle said at the UN's Climate Conference in Glasgow Nov. 3.

The bank has just announced a partnership with European Commission President Ursula von der Leyen and Bill Gates' Breakthrough Energy Catalyst to deploy up to Eur820 million ($949 million) to scale up green hydrogen, synthetic aviation fuel, direct air carbon capture and long-term energy storage technologies, many of which are being backed by large oil and gas companies.

"As a climate bank it is not tenable to support a company to develop a low-carbon project if, at the same time, the company intends to develop and expand highly carbon-intensive projects as part of its wider activities," Fayolle said during a COP26-arranged press conference.

The only exception would be for projects with very high innovative value (for example, green hydrogen or advanced biofuel production), "reflecting the intellectual property and technical expertise held by oil and gas majors that is crucial to achieving long-term deep decarbonization," he said.

First-of-a-kind demonstration of floating wind farm technology could also fall into this category, the bank's DG, Projects Directorate, Christopher Hurst said.

Norwegian oil and gas company Equinor is a leading developer of floating wind and is currently installing an 88-MW asset, Hywind Tampen, to provide electricity for the Snorre and Gullfaks offshore oil and gas field operations in the Norwegian North Sea.

Carbon capture and storage would be another technology where first-of-a-kind demonstration by a fossil fuel company could be supported, Hurst said.

The EIB's Chief Climate Change Expert Nancy Saich said the exception had been made because "we note there are important developments that we are going to need within high-emitting sectors, and we want to encourage a very high level of innovation to accelerate their development."

EIB President Werner Hoyer, meanwhile, warned that fossil fuel companies seeking finance would be turned away if they were seen to be using carbon offsetting to perpetuate conventional fossil fuel activities.

"If we have a clear, credible plan then we can do it [support projects put forward by high-emitting sectors]. But if we have the feeling companies are hiding behind the offsetting idea in order to keep going the same way as for the last 100 years, then we will not do it," he said.