This change of scale was decided upon by the European Investment Bank (EIB). It wants to align its loan grants with the Paris Agreement objectives. To do this, the EIB has declared its intention to stop all fossil fuel financing by the end of 2020, as outlined in their new energy strategy published on July 26th. This announcement is part of the 2018 European climate commitment and sustainable finance plan, the 2019 climate strategy, and the recent publication of a classification system for positive ecological transition activities this past June.
The decision is the result of a consultation process with EIB stakeholders (NGOs, citizens, companies, etc.) that has been established since January. They are the ones who expressed the need to better take into account global warming in its banking activities. In early July, NGO Friends of the Earth denounced the €7.9 billion in loans granted to the fossil fuel sector between 2015 and 2018, or 21% of the bank’s total loans.
Awareness from the EIB
Leaders from the Luxembourg institution seem to have taken into account these criticisms. While it fully understands the role fossil fuels will continue to play within EU energy systems for at least the coming decade, the Bank provides higher additionality* by focusing on the longer-term challenge and investment needs of the energy sector," they write in their report.
The EIB plans to act in four directions to combat global warming: energy efficiency, particularly in the residential property sector; strengthening of renewable energies to reach the 2030 target (27% renewable in consumption); investment in new low carbon technologies; and the development of energy infrastructure. To counter criticism from states heavily dependent on fossil fuels, EIB leaders also want to establish an Energy Transition Package.
This new strategy has been well received by NGOs, which have long been waiting for the European funding body to align its lending strategy with the economy on a 1.5°C trajectory. However, NGOs remain cautious. The document published by the EIB has yet to be validated by European Union Member States, all of whom are shareholders of the bank. They meet to discuss the strategy starting on September 10th.
NGOs on the lookout
Everything will be played out during these meetings. NGOs are already starting to put pressure on states, particularly France, which is one of the bank’s main shareholders. The idea of transforming the EIB into a European climate bank, has been taken over in part by in-coming European Commission President, Ursula von der Leyen, and driven by Emmanuel Macron.
Friends of the Earth are on the lookout to see if France’s pro-climate positions are sincere. "If so, the government must publicly support ending fossil fuel investments from the public bank,'' said Cécile Marchand, climate change and public actors campaigner for Friends of the Earth. Marchand added, “This will be the crash test. Now we are awaiting clear answers from Bruno Le Maire (French Minister of the Economy and Finance and member of the EIB Board of Governors) on this issue”.
Arnaud Dumas @ADumas5
*Additionality is the additional value that public investment brings to private financing.