The European Investment Bank will stop funding fossil fuel energy projects after the end of 2021 and focus on financing clean energy innovation, the lender said Thursday.
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The move means the bank's financing will unlock Eur1 trillion ($1.1 trillion) of climate action and environmental sustainable investment in the decade to 2030.
"Climate is the top issue on the political agenda of our time," said EIB President Werner Hoyer.
"Scientists estimate that we are currently heading for 3-4 degrees C of temperature increase by the end of the century. If that happens, large portions of our planet will become uninhabitable, with disastrous consequences for people around the world," he said in a statement.
The bank has launched what it says is the most ambitious climate investment strategy of any public financial institution anywhere.
The EIB's new energy lending policy includes five principles that will govern its future engagement in the energy sector:
- Prioritizing energy efficiency with a view to supporting the new EU target under the EU Energy Efficiency Directive.
- Enabling energy decarbonization through increased support for low or zero carbon technology, aiming to meet a32% renewable energy share throughout the EU by 2030.
- Increasing financing for decentralized energy production, innovative energy storage and e-mobility.
- Ensuring grid investment essential for new, intermittent energy sources like wind and solar, as well as strengthening cross-border interconnections.
- Increasing the impact of investment to support energy transformation outside the EU.
The bank will no longer consider new financing for unabated fossil fuel energy projects, including gas, from the end of 2021 onwards.
It has also set a new Emissions Performance Standard of 250g/kWh, which replaces the current 550g/kWh standard,for gas-fired power generation.
This means gas-fired generation in general will need to be complemented with carbon capture technology or switch to biogas, to qualify for EIB funding.
However, commercial lenders and other development banks could plug the gap left by the EIB, providing funding for gas that could maintain the fuel's viability in future.
The EIB has helped fund major gas infrastructure projects in recent years, including the Greece-Bulgaria interconnector, the TANAP gas pipeline through Turkey and its connected Trans Adriatic Pipeline (TAP), plus a number of new LNG import terminals.
In terms of big-ticket gas infrastructure projects, there are few new projects in Europe that could have a needfor EIB funding.
Industry group Eurogas welcomed the EIB's new policy.
"The bank's new lending rules will support the deployment of carbon capture and storage, power-to-gas, hydrogenand biogas. Investments in the gas infrastructure will deliver these technologies that all support the achievement of the [EU's] 2050 carbon neutrality target," Eurogas said in a statement Thursday.
-- Frank Watson, firstname.lastname@example.org
-- Edited by James Leech, email@example.com