EU bank must not be undermined by gas lobby
The European Investment Bank (EIB) board - made up of Member States and the European Commission - is due to discuss the EIB’s draft energy lending policy on 10 September. The draft policy is also on the agenda of the meeting of EU finance ministers (the ECOFIN Council) on 14 September. While the draft is mostly very progressive, there is a risk of its being significantly weakened by the European Commission and some Member States who support gas.
Why does it matter?
The EIB has traditionally funded fossil fuels - giving oil, gas and coal projects more than €2.4bn in 2018. Its new draft policy, however, proposes ending fossil fuel funding from the end of 2020. If the new policy gets adopted and its loopholes tightened, without getting weakened at the upcoming meetings, it will be a major step towards a climate neutral EU, which in WWF’s view must be reached by 2040.
Quote from Sébastien Godinot, Economist at WWF European Policy Office:
“Getting our financial system right is key to tackling the climate emergency, and the huge EU public bank becoming fossil-free could be a game-changer.
“By pulling the plug on many fossil fuel projects and their emissions, it would send a major signal globally, while supporting a Europe-wide move to a zero-carbon economy.
“It seems the European Commission - despite claiming that Europe is a climate leader - is trying reintroduce gas into future EIB policy through the back door. Together with forward-looking Member States, the Commission must defend EIB policy against the gas lobby. Financing polluting gas with public money when we face a climate crisis is scandalous.. ”
What are national positions?
Many Member States do not have an official position yet on the policy. However, so far it appears that:
- France supports the ambitious draft policy as it stands.
- The European Commission and a group of countries including Latvia and Italy, and potentially Spain and Malta, want to include gas in the draft.
- Germany is currently split, but likely to reach a government position today.
What is good in the draft policy:
- the proposed phase-out of fossil fuel support by end 2020 (with exemptions)
- the integration of the Energy Efficiency First principle, coupled with a new building renovation initiative
- a new energy transition package, with the EIB proposing to give up to 75% financing to projects in Member States or regions with a ‘more challenging transition path’.
What can be done to improve the draft policy:
- Tighten the exemption criteria for fossil fuel financing.
- Set a stronger Emissions Performance Standard (EPS) at a level of 100 g CO2/kWh, to align with the forthcoming EU sustainable taxonomy.
- End financing for utilities and oil & gas companies that don’t commit to Paris Agreement alignment.
- Ensure that climate-dangerous non-fossil gases are excluded.
- Set up a test to establish whether a supply-side investment in energy efficiency could be replaced by a demand-side investment.
- Tighten EIB criteria for bioenergy: limit support to fast-decaying wastes and residues with no other uses (excluding stumps and stemwood)
- Tighten EIB approach for hydropower: focus on retrofitting or dismantling existing hydro.
- Accordingly, commit to update the EIB climate strategy in 2020, including its climate spending target - as proposed by future Commission’s President von der Leyen in her European Green Deal proposal.
Economist, WWF European Policy Office
+32 489 46 13 14
Senior Communications Officer, WWF European Policy Office
+32 473 57 31 37