EIB’s proposed divestment from fossil fuels could go up in flames

In July 2019, the European Investment Bank (EIB) proposed a bold new energy lending policy which would halt support to all fossil fuel projects by the end of 2020. Now, this provision is put in jeopardy by the gas industry, the EU Commission and Germany, who pressure the EIB to fund gas power plants after 2020.

In its initial proposal, the EIB had vowed to no longer “support upstream oil or gas production, coal mining, infrastructure dedicated to coal, oil and natural gas (networks, liquefied natural gas terminals, storage) and power generation or heat production from fossil fuel sources (coal, gas, oil, peat)”.

However, the new version of the energy lending policy, published last Friday in the late afternoon, is now much weaker on divesting from fossil fuels and more positive on supporting gas infrastructure. A new paragraph has been added, saying that the EIB “appreciates the necessary role that gas will continue to play to decarbonize energy systems”. Furthermore, Europe’s public bank will also “continue to potentially approve gas infrastructure projects already formally under appraisal (“in the EIB system”) until the end of 2020”. This funding for gas also explicitly includes the gas projects labelled as EU Projects of Common Interest, which receive strong support from the Energy-Directorate of the EU Commission.

In addition to this, a new loophole has been introduced to allow for funding gas power plants after 2020. The EIB would still finance a gas plant with less than 250 g CO₂ per kWh GHG emissions on average over the plant’s economic lifetime. A proposed gas project would have to present a credible plan to add increasing shares of “lowcarbon gas” (e.g. biogas, hydrogen, synthetic gas) over its economic lifetime. However, this means in practice that the EIB can still finance gas power plants that are above the defined emissions threshold. 

Among EU Member States, which have to approve the EIB’s proposed new policy, Germany stood out in particular in supporting a more gas-friendly approach. As Germany seeks to phase out coal by 2038, it intends to use natural gas and other gases as a “climate-friendly bridge technology” in its energy transition instead. Yet, as a recent study by the German think tank Energy Watch Group has demonstrated, natural gas makes no contribution to climate protection. Quite the contrary: a “dash for natural gas” would further amplify climate change, as the spiking methane emissions from gas would far outweigh its supposed CO₂ savings. 

Germany must change course to back a fossil free EIB

Germany, although no longer a climate leader, still holds a strong influence in determining the EU’s future energy policy. By championing a robust new EIB energy lending policy, which explicitly divests from fossil fuel projects after 2020, the German government could regain some of the climate credit it has lost these past years. German finance minister Olaf Scholz will play a key role in the next meeting of EU Member States on the EIB’s new policy on October 15, where EU countries are expected to approve the final version of the bank’s future energy lending policy.

Eckart Würzner, Energy Cities’ president and Lord Mayor of Heidelberg, calls on German finance minister Olaf Scholz to support a fossil free EIB, in order to truly transform Europe’s public bank into its climate bank.

Eckart Würzner’s call is published on the German online media Energiezukunft.