The decision receives the yes of Germany and Italy thanks to a commitment: the extension of the deadline for entry into force of the initiative, from 2020 to 2021.
As part of the new strategy, future energy projects will have to demonstrate that they emit less than 250 g of CO2 / kWh apply for funding.
By 2021, fossil fuel projects will no longer be eligible for funding and, to facilitate the transition, more funds will be available for renewable energy.
The European Investment Bank (EIB) has decided to stop financing fossil fuels: the European financial arm will stop funding projects using oil, coal and gas by the end of 2021.
This decision was preceded by a long day of negotiations, mainly due to the fact that the EIB resolution will inevitably affect the European economy, especially in relation to the billions of investments underway in gas pipeline projects. However, a compromise was eventually found and the financial institution is preparing to become a “climate bank” full right.
Italy and Germany were in favor after extending the deadline for stopping funding for gas projects, which was postponed from 2020 to 2021 precisely to appease countries that wanted more flexibility.
Extending the cap for gas projects, on the other hand, was also key to securing the blessing of the European Commission, which had opposed a 2020 date to continue its projects on natural gas as a transitional fuel.
In official statement, the Commission said it was “satisfied that the EIB Board of Directors has reached an agreement on the transition to the phase-out of gas projects“.
In the end, the bank’s new energy lending policy was approved with overwhelming support: members representing 90% of the bank’s capital voted for, although countries like Cyprus, Estonia, Lithuania and Malta abstained due to a lack of increased flexibility on fossil fuels. The same is true for Austria and Luxembourg, but because of what has been seen as a weak political line when it comes to nuclear energy. Under the EIB’s new lending and financing strategy, energy projects applying for financing must demonstrate that they can produce one kilowatt hour of energy while emitting less than 250 grams of carbon dioxide, a reduction of 550 grams of carbon dioxide.
In addition, in the case of gas, the bank will finance projects using new carbon capture and storage technologies, or combining renewable gas and fossil natural gas. Therefore, new rules will take into account low carbon gases such as biogas and hydrogen.
The bank’s new policy will also increase the upper limit for financing energy projects for low-income countries from the current 50% to 75%, so that they can meet the energy investment challenges they face.
Finally, all Member States will be able to access a higher ceiling for financing renewable energy projects: according to the 2050 plan, more than 500 billion euros will be needed each year to decarbonise the EU economy as a whole, and the EIB argues that its new policy will free up € 1 trillion in investment by 2030.
This is an important first step, not the last.
Andrew McDowell, Vice-President of the EIB.
Two weeks ahead of the UN climate change conference in Madrid, the move sends an important signal to the world that the EU and its bank are committed to mobilizing investments on an unprecedented scale to support action on climate change .
Emma Navarro, Vice-President of the EIB.
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