The European Investment Bank (EIB) on 15 October postponed taking a decision to next month on whether to phase out lending to fossil fuels, following objections from the European Commission and some EU Member States, including Germany, Italy, Poland and Latvia want the bank to keep funding certain gas projects to help the transition from coal or nuclear power, or for energy security reasons.
EIB President Werner Hoyer, who is committed to align all the EIB operations with the Paris Agreement and increase the financing for sustainable energy projects, has proposed to stop its fossil fuel lending by the end of 2020, which would make the EIB the first multilateral bank to phase out new financing of natural gas. It has already stopped all coal lending.
But the Commission wants the bank to continue financing projects linked to natural gas, which produces less greenhouse gas emissions than coal or oil. Highlighting the need for energy security, Energy and Climate Miguel Arias Cañete has said natural gas, including liquified natural gas (LNG), will remain an important component of the EU’s energy mix in the near future as the bloc moves towards cleaner sources of energy.
Germany, which is the EIB’s biggest shareholder, also wants the EIB to keep supporting natural gas projects Germany as Europe’s largest economy plans to phase out nuclear.
Following the board meeting on 15 October, the Financial Times quoted EIB Vice President Andrew McDowell as saying he was “increasingly confident” that an agreement would be reached on the contentious proposal next month. The next EIB Board of Directors meeting is on 14 November. “This is a big change in EIB policy,” McDowell said. “Every member of the EIB, all 28 countries, made an intervention on this issue.”
Reuters quoted McDowell as saying the delay would “allow some more national reflection” after some countries asked for clarification on the proposal from EIB to completely stop funding fossil fuel-linked projects from the end of next year.
Counter Balance, Bankwatch and a large number of civil society groups and local authorities part of the Fossil Free EIB campaign have been urging the EIB to stop lending public money to fossil fuels. Anna Roggenbuck, policy officer at CEE Bankwatch Network, argued that the European leaders are not making necessary decisions and are undermining the right proposals made by the EIB. “We are disappointed by this delay but still hope that the initial proposal will be adopted in November” she said.
European Commission’s president-elect Ursula von der Leyen has vowed to make tackling climate change a priority and pledged to introduce a “European Green Deal” within 100 days of taking office. “This is one of the promises made by Ursula von der Leyen to MEPs,” Cyprus Natural Hydrocarbons Company CEO Charles Ellinas told New Europe on 17 October. “She promised a just transition for all, ‘leaving nobody behind’, by putting together a Sustainable Europe Investment Plan (SEIP) that will support €1 trillion of investment over the next decade ‘in every corner of the EU.’ The idea is to convert EIB to a Green Bank to deliver this. But there is strong resistance by countries like Germany and Poland. Making EIB responsible for SEIB makes sense and I believe it will happen because it is central to von der Leyen’s European Green Deal, and it is also needed if another promise, that of net-zero carbon emissions by 2050, is to be achieved,” Ellinas said.
According to the Cyprus Natural Hydrocarbons Company CEO, there is no need to make a commitment to stop funding natural gas projects immediately. First, there has to be a transition period. But it also makes sense to first await the publication of the Green Deal in February next year. This will, most likely, conclude that natural gas will be needed during energy transition, well into the 2030s, may be in some decarbonised form,” Ellinas said, adding that the board of the world’s largest multilateral development bank, the EIB, made up mostly of EU finance ministers, can then formulate sensible policies to gradually phase out funding of traditional natural gas projects, and increasingly support development and production of green gasses. But that would be possible only after the European Commission has developed its climate policies, Ellinas argued, warning that stopping funding of gas-related projects now is premature and may harm Europe’s energy reliability and security during the transition period.