Brussels — The European Investment Bank proposes to stop considering new loans to fossil fuel projects, including natural gas infrastructure, from the end of 2020, it said in its draft updated energy lending strategy Friday.
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It wants to focus on investments that can help the EU meet its long-term decarbonization goals, such as renewable power and gas, low-carbon gases like hydrogen, power grids, battery storage and demand-side response.
Loans to projects involving upstream oil and gas production, oil, coal or natural gas infrastructure, including LNG terminals and storage, as well as power generation or heat based on fossil fuels would not be put forward for approval by the bank's board after the endof 2020.
The only exceptions would be high-efficiency gas-fired power and heat plants that meet all the bank's criteria, including an emissions limit of 250g CO2/kWh of electricity, and efficient gas boilers included in building renovation programs.
The bank said it "fully understands the role fossil fuels will continue to play" in the EU's energy mix for "at least the coming decade," but that it could add more value focusing on the EU's longer-term investment needs.
The EU has committed to cutting its CO2 emissions by at least 80% from 1990 levels by 2050, and European Commission president-elect Ursula von der Leyen has promised to propose raising this to a 2050 net-zero carbon target in a climate law next year.
The bank proposes not lending to any power project that exceeds the 250g CO2/kWh emissions limit, noting that this could exclude some geothermal, large-scale hydro or biomass power plants.
The bank has applied a 550g CO2/kWh emissions limit, which ruled out all unabated coal and lignite-fired power plants, since 2013, when it last updated its energy lending strategy.
The EU included the 550g limit for power plants taking part in capacity remuneration mechanisms in its new EU power market design rules adopted earlier this year.
The bank's board of directors is to discuss the draft strategy on September 10.
The updated energy lending strategy applies as soon as it is approved.
-- Siobhan Hall, firstname.lastname@example.org
-- Edited by James Leech, email@example.com