The new European Commission President
Ursula von der Leyen has promised a Green Deal for Europe. For it to be truly
green, it will have to be fossil fuel free and this means cleaning up the
European Investment Bank. The development bank this summer proposed phasing out
support for oil and gas projects. Colin Roche from Friends of the Earth Europe
urges the EIB board to back the plan when it meets in September.
Even before new European Commission
President von der Leyen stood up before the European Parliament in July 2019 to
seek approval from members of the European Parliament for her mandate, it was
clear that climate change would have to be high on her programme. Not only had
unprecedented protests and youth strikes put the climate emergency on the
agenda, but a green wave had swept a record number of green MEPs into
Parliament, while forcing others to up their climate demands. Her response was
to promise a Green Deal For Europe.
A key element of this deal is the
proposal to transform part of the European Investment Bank (EIB) into Europe’s
Climate Bank. The idea was not hers alone. In 2018, figures such as former EU
Trade Commissioner Pascal Lamy and former EU President Romano Prodi had already
called for a European Bank for Climate and Biodiversity. French President
Emmanuel Macron picked this up during the recent EU elections, while the
Socialist and Democrat groups in the European Parliament also proposed to house
a European Climate Bank within the EIB.
Having a European Climate Bank as part
of the EIB, a bank-within-a-bank, begs one important question, however: what
happens to the non-climate part? Will EU citizens be left with a dirty bank run
in parallel with the climate bank?
The EIB does not have a promising track
record when it comes to reducing our reliance on fossil fuels. It decided in
2013 to effectively end support to coal projects, but it has since continued to
spend billions financing fossil fuel projects such as gas pipelines.
Between 2013 and 2017, it spent €11.8
billion supporting gas projects. Just last year, and a little more than two
years after the Paris climate agreement, the bank provided €2.4 billion in
loans to the Southern Gas Corridor. This highly controversial pipeline
transporting gas from Azerbaijan to Italy is projected to operate for 50 years,
decades after the International Panel on Climate Change says the world needs to
reach net-zero emissions. Meanwhile, the Bank has continued to fund coal-heavy
utilities such as Poland’s Energa and PGE even while they continue to invest in
new coal plants.
To continue to lend to projects that
accelerate climate change while claiming the mantle of Climate Bank would be
inconsistent, financially futile and would compromise the future of our planet.
It would also fail to deliver on Article 2 of the Paris agreement which commits
signatories to align all financial flows with the deal’s goals.
Fortunately the EIB itself has now
recognised this. In a potentially ground-breaking move, the Bank this summer proposed to ‘phase out support to energy
projects reliant on fossil fuels: oil and gas production, infrastructure
primarily dedicated to natural gas, power generation or heat based on fossil
fuels’ and will ‘stop lending to fossil-fuel energy projects by the end
of 2020’. This would apply ‘to all intermediated operations of the Bank,
including through commercial banks and investment funds.’
The EIB argues that many energy projects
it supports will potentially be operating beyond 2030 and need to be aligned
with the Paris agreement. Recognising the risks of fossil fuel lock-in, it
proposes to focus on infrastructure needs over the long term to help meet the
investment challenges associated with EU 2030 climate targets and beyond, most
notably achieving net-zero carbon. It sees that demand for fossil fuel
infrastructure will fall. The Bank has decided that its resources are best
spent meeting the net-zero challenge and is unwilling to risk the creation of
unnecessary new fossil fuel infrastructure.
In short the EIB has seen the writing on
the climate wall and has improved on von der Leyen’s and Macron’s ideas by
proposing that no part of the bank continues to hedge its bets on fossil fuels
and that it instead concentrates on solutions to the climate crisis such as
renewable energy and energy efficiency.
It is now up to EU member states through
their nominees on the Bank’s Board of Directors to decide.
If this proposal is carried through, it
will give greater credibility to the push for the EIB to be the EU’s Climate
Bank, while boosting the credibility of von der Leyen’s Green Deal. It will
also be an important signal to markets, governments and other banks to follow
Failure to back the policy would be a
stinging rebuke to the burgeoning climate movement and a setback to the new
Commission President’s first green efforts.
Following another summer of record
temperatures the board now has to make up its mind; either back a fossil free
future, or continue to fund climate breakdown and see thermal and political