The European Investment Bank (EIB) will no longer finance any fossil fuel energy projects including natural gas from the end of 2021 onwards, a statement from the bank said on Thursday.
The board of the world's largest public bank, EIB, agreed a new energy lending policy and confirmed the bank's greater ambition for climate action and environmental sustainability, it said in the statement.
Consequently, the bank’s future financing will accelerate clean energy innovation, energy efficiency and renewables for which the EIB will unlock €1 billion in financing in the decade to 2030, the bank said.
Over the last five years, the EIB has provided more than €65 billion in financing for renewable energy, energy efficiency, and energy distribution.
"The EIB will gradually increase the share of its financing dedicated to climate action and environmental sustainability to reach 50% of its operations in 2025 and from then on," the statement read.
The bank aims to finance environmentally sustainable investment that will align with the goals of Paris Agreement from the end of 2020.
A total of 195 countries are currently signed up to the Paris Climate Agreement, which is due to commence in 2020. It aims to reduce the impacts of climate change by preventing the global average temperature from increasing to 2°C above pre-industrial levels, with a view to further limit this to less than 1.5°C. However, how these targets will be achieved and funded by all countries has not yet been agreed.
"Climate is the top issue on the political agenda of our time. Scientists estimate that we are currently heading for 3-4°C of temperature increase by the end of the century. If that happens, large portions of our planet will become uninhabitable, with disastrous consequences for people around the world," President of the EIB, Werner Hoyer, was quoted as saying in the statement.
He stated that the EIB has been a climate bank for many years but now has decided to make a quantum leap in its ambition.
"We will stop financing fossil fuels and we will launch the most ambitious climate investment strategy of any public financial institution anywhere," Hoyer noted.
- Five principles in new lending policy
The EIB's new energy lending policy details five principles that will govern future EIB engagement in the energy sector.
- Prioritizing energy efficiency
- Enabling decarbonization through further support for low carbon technology
- Increasing financing for decentralized energy production and innovative energy storage
- Ensuring grid investment for intermittent renewable sources
- Increasing the impact of investment to support energy transformation outside the EU
By Nuran Erkul Kaya