The European renewable industries welcome the decision by President Elect of the Commission von der Leyen to enshrine the objective of net-zero carbon emissions by 2050 into EU law.
The European Investment Bank is the largest public development bank, providing financing to a wide array of projects, notably in the energy sector. Yesterday, the EIB reached an agreement that it would stop providing funding to fossil fuel projects from 2022 owards.
This development is a crucial step towards the redirection of financing to the energy transition, although the Energy Lending Policy adopted by the Bank are not quite on par with EGEC's expection. Indeed, as the largest public development bank, the EIB has an outsized impact on the allocation of financing to the energy sector, and as such it represents a model to follow for other financial institutions. The Bank has for instance previously been a pioneer in setting criteria that discriminate against financing coal projects, a stance now taken by many major financial institutions. The updated Energy Lending Policy constitute a template for other public and private financial institutions to also ban lending to fossil fuel projects.
EGEC was very active in promoting such a shift in the EIB's lending activities in the energy sector, and was advocating for a ban on fossil fuel lending from 2020. EGEC notably co-signed several statements to that end, in particular with the renewable energy industry. However, the decision to stop funding from 2022 - while it will still induce the development of likely stranded fossil fuel assets, or locking in new fossil fuel emissions - does still represent a crucial step in reshaping the energy sector.
Some further caution about the updated energy lending policy should also be applied, considering the existence of several loopholes in the policy.
Further information will follow for EGEC members.
The European Investment Bank is currently in the process of drafting its updated energy lending policy. As the European Union is progressing towards decarbonisation, and the 2050 horizon is nearing quickly, EGEC joined other industry associations and think tanks to call for the EIB to promptly stop funding fossil fuel projects.