Worlds largest public financial institution halts lending to dirty coal

Intro

Green groups have cautiously welcomed an announcement from the European Investment Bank (EIB) today, which says the bank will introduce new lending criteria to rule out coal projects. The EIB – the world’s largest public financial institution – says it will introduce an Emissions Performance Standard (EPS) for new energy projects, setting an emissions limit of 550 grams of carbon dioxide per kwh, effectively ruling out support for dirty coal and lignite power plants. They say the limit reflects “existing EU and national commitments to limit carbon emissions”, yet some directors present at the meeting pushed for an even higher performance standard of 450 CO2/kWh. WWF say the standard, if implemented correctly, will rule out the dirtiest projects but are now calling on the bank go further and “phase out its support for all power supply based on fossil fuels.” Green groups have also raised concerns that two loopholes in the new standards being introduced could allow funding for coal plants to continue if they either “contribute to the security and supply” within the EU or “to poverty alleviation and economic development” outside of the EU. The board of directors are in the process of clarifying these exceptions to ensure they do not derail efforts to phase out lending to unabated coal plants.

The latest announcement follows last week’s “historic decision” from the World Bank to limit its funding for coal power plants to “only rare circumstances” and builds on the growing number of financial institutions moving away from dirty sources of energy. Having lent around €11 billion to fossil fuel plants since 2007, the EIB has long been a target for campaign groups, and last month EU Commissioner for Climate Action, Connie Hedeggard, added her voice to the growing chorus. She called on the EIB, the World Bank and the European Bank for Reconstruction and Development (EBRD) to halt lending to fossil fuel projects. These institutions are collectively responsible for around a $130 billion lending pot and nearly $37 billion in coal finance over the last five years. With the recent announcements from both the World Bank and the EIB, attention has now turned to the EBRD as it presents its new energy strategy in London tomorrow.  While a draft proposal shows criteria for lending tightened, campaigners  warn there is still room for the Bank to continue lending to the “very dirty coal projects” and are calling on the EBRD to “follow the EIB’s example, and to clean up their act too.

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MT @ldemuele: After @WorldBank, @EIBtheEUbank commits to #endfossilfuelsubsidies, all eyes are now on @EBRD http://bit.ly/12iDW7X #Climate

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Key quotes

“Adoption of the new lending criteria represents an important step forward in the European Investment Bank’s commitment to energy investment that supports EU policy and reflects the urgent investment challenges currently facing the energy sector. Prioritising lending to energy efficiency, renewable energy, energy networks and energy RDI projects will help EU to meet its energy and climate objectives and create local employment across Europe. The new Emissions Performance Standard will ensure that outside these sectors the Bank’s energy lending makes a sustainable and positive contribution to economic growth.” – Mihai Tanasescu, European Investment Bank Vice President responsible for energy lending

“The move by the EIB is very welcome but more needs to be done. To have a serious chance at staying within the 2°C climate change limit in Europe by 2050, the EIB should strengthen its standards and eventually phase out its support for all power supply based on fossil fuels. Coal is the dirtiest of fossil fuel power sources – polluting local environments, impacting on people’s health and contributing heavily to climate change. It is now time for all international Financial Institutions and especially the European Bank for Reconstruction and Development, to follow the EIB’s example, and to clean up their acts too.” – Sebastien Godinot, economist at WWF’s European Policy Office

“The European Commission is now busy making proposals for a European Climate and Policy Framework for 2030. Alongside binding targets for greenhouse gases, renewable energy and energy savings the Commission should follow the EIB’s approach and ensure we don’t move backwards instead of forwards, by proposing an emissions performance standard on power plants in the EU.”  – Jason Anderson, head of climate and energy policy at WWF’s European Policy Office

“It is important to have clarification on these exemptions, because these can open the gates for any dirty coal project to receive financing as long as its proponents are able to convince that the loan is essential for energy security. How this issue will be clarified over the next period will say a lot about whether the EIB and EU Member States are indeed committed to the transition to low-carbon economies. While we see promising signs in today’s policy, much more is needed.” – Kuba Gogolewski, Bankwatch energy campaigner

“The vote to introduce an EPS represents a stepchange in the EU’s fight against climate change – and puts the bankers ahead of politicians in terms of tangible action. With several Directors pushing for 450gCO2/kWh at the meeting, I’d expect to see it tightened further over next 12 months, as the politics of the EU’s broader approach to 2030 targets is settled.” – Ingrid Holmes, Associate Director at E3G

“The low-carbon transition appears to be a central theme of the [EBRD’s] draft strategy but when it comes to the fossil fuels sector, this only translates into a potential slight reduction in coal investments. The draft acknowledges the carbon lock-in effect of fossil fuel infrastructure and that we must avoid this kind of effect, yet the general support for the hydrocarbons sector continues as usual. Oil and gas are the most common words used in this document. Not to mention that in this new draft, the bank opens the door to shale gas investments.” – Ionut Apostol, Bankwatch energy campaigner

More tweets

MT @shenningsson: Good step as @EIBtheEUbank commits to end support to coal power http://bit.ly/16YVl1I More ambition by @EBRD tomorrow?

MT ‏@James_BG: Only matter of time before private investors follow EIB & World Bank & turn nose up at unabated coal http://bit.ly/1c2kq1e

RT ‏@rtcc_edking: First the World Bank and now the EIB – financing for new #coal continues to dry up: http://bit.ly/1bgApuM

RT ‏@ret_ward: European Investment Bank to focus more on low-carbon infrastructure, less on coal: http://is.gd/Ck6r34

RT @NikolaGazdov: EIB restricts – but does not eliminate – coal and other fossil fuel lending | Bankwatch http://bit.ly/11dAB7v

RT ‏@StollmeyerEU: World’s largest public bank commits to stop funding #coal power http://bit.ly/16YVl1I #EIB @EIBtheEUbank