by Peter Kramer
The European Investment Bank’s new policy will limit funding for new fossil fuels projects starting at the end of 2021. It means the EU will largely end support for coal and oil, but some gas infrastructure will continue to be eligible for financing, following pressure from Germany, Italy, Poland and the European Commission. Nineteen EU governments supported the new policy, including Germany, France and Italy, while three - Poland, Romania and Hungary - voted against, because they wanted more flexibility for gas funding. Six governments abstained: Estonia, Lithuania, Cyprus and Malta also wanted easier funding for gas, while Austria and Luxembourg objected to the continued eligibility of nuclear power for funding.
The continued funding of projects like gas pipelines until 2021, and the modernisation of existing fossil fuel infrastructure beyond 2021 threatens the EU’s climate commitments. Gas infrastructure could be operational until the middle of the century, threatening pledges by the European Commission and most European governments to reduce EU emissions to net zero by 2050.
Until the end of 2021, the EIB will also be able to fund gas infrastructure projects that are currently being assessed by the bank and some other fossil fuel projects that are yet to be submitted. Nuclear energy will continue to be eligible for EIB funding, despite soaring costs, as the cost of renewable energy continues to fall rapidly.
“As the climate emergency continues to escalate, Europe cannot afford to waste one more day or one more euro on fossil fuels. All fossil fuel funding should be banned, including for fossil gas”, said Piotr Wojcik, Greenpeace.
The EIB published a first draft of its new energy lending policy this summer, which proposed to end all new funding for fossil fuel projects after 2020. However, the European Commission and some EU governments, led by Germany and Poland, lobbied successfully for the bank to finance more fossil gas and lower carbon fuel projects. As a result, the EIB will still provide funding for fossil power plants which emit less than 250g CO2 per kWh of electricity generated (averaged over the lifetime of the power plant) and for so-called ‘low carbon fuel’ projects, such as hydrogen and biogas. This last loophole could act as a backdoor to keep old gas infrastructure in operation.