The European Investment Bank announced on Thursday that it will stop financing energy projects related to fossil fuels in two years, as part of its fight against climate change.
According to the new EIB policy that will enter into force “at the end of 2021,” those energy projects that request financing must verify an emission of less than 250 grams of carbon dioxide per kilowatt-hour of energy generated.
Gas-based energy projects may still request financing , but first they will have to demonstrate that they will implement “new technologies”, including carbon capture and storage and the combination of heat and electricity generation.
In addition to the flagship announcement on fossil fuels, the EIB expects its investment activities to “unlock” up to 1 trillion euro of investment in climate action and sustainable development over the next decade.
The decision to prioritise cleaner forms of energy follows a commitment made by the incoming European commission president, Ursula von der Leyen, to turn the EIB into a “climate bank”, to act as the financial driving force behind the transition to a carbon neutral economy in Europe by 2050.
The project was initially scheduled to enter into force at the end of 2020 but was pushed back by one year as some countries wanted additional time to continue financing gas-related projects.
The announcement by the EIB, the world’s largest multilateral lender, is expected to serve as an example to other regions as well as the other six multilateral development banks to also divest from fossil fuels.
Kate Cahoon, a campaigner for 350.org, told the Guardian: “When the world’s biggest public lender decides to largely ditch fossil fuels, financial markets across the globe will take notice: this is the beginning of the end of climate-wrecking fossil fuel finance.”
On Wednesday Reuters reported that the African Development Bank (BAFD) that it will no longer finance coal-related projects, although support for gas and oil will continue.