The European Investment Bank is phasing out its multi-billion euro investments in fossil fuels within the next two years to become the world’s first ‘“climate bank”, following a marathon meeting of its board of directors.
The bank – the EU’s lending arm – will end its financing of oil, gas, and coal projects after 2021, a policy that will make the EIB the world’s largest multilateral development bank to end fossil fuel investments.
Instead, the EIB's new strategy includes supporting climate and environment investments of €1 trillion ($1.1 trillion) from 2021 to 2030. Its aim is to see this sector hit 50% of EIB operations from 2025 onward.
The decision has been welcomed by green groups as an important step towards the EU’s aim to be carbon-neutral by 2050. The EIB designed its new energy policy with a view to aligning with the Paris Agreement; its conclusion was that investing in fossil fuel projects would be misaligned with the Paris Agreement.
It has also sets a tighter emissions performance standard of 250 grams of CO2 per kilowatt-hour for energy projects it supports, down from the current 550-gram CO2/kWH standard.
Green groups praised the move: “When the world’s biggest public lender decides to largely ditch fossil fuels, financial markets across the globe will take notice,” Kate Cahoon, Germany campaigner at 350.org said in a statement. “This is the beginning of the end of climate-wrecking fossil fuel finance.”
Disinvesting from coal
The EIB's move came after the African Development Bank announced in September that it will no longer finance coal projects. It was the first public announcement by the bank committing to end financial support for coal.
“Coal is the past, renewable energy is the future,” bank president Akinwumi Adesina told the UN Climate Action Summit. “For us at the African Development Bank, we are getting out of coal.”
Other multilateral development banks, such as The World Bank Group, the European Bank for Reconstruction and Development, and the European Investment Bank, have explicit policies that exclude coal from their portfolios, according to Oil Change International.