Since 2013, the European Investment Bank (EIB) has funded fossil fuel projects to the value of €13.4bn, including spending of around €2bn last year. However, the EU has now announced it will stop funding all oil, coal, and gas projects by the end of 2021.
Due to lobbying by some EU countries, the ban will come into effect a year later than was originally proposed. But, under the new policy, any project looking to receive EU funding will need to follow strict rules, otherwise the financing will be declined.
The changes mean that any energy company applying to the bank will need to show they are able to produce one kilowatt of energy per hour, whilst emitting under 250 grams of carbon dioxide. This means that, although some projects are still possible, most traditional gas burning power plants will be excluded.
Going forward, gas projects will only be possible if they are based on “new technologies”. This would include things like combining heat and power generation, carbon capture and storage, or combining fossil fuels and natural gas with cleaner, renewable gases
Gas projects are seen as a cleaner option, and are commonly used as an alternative to fossil fuels in the EU. In recent years, however, protests against fossil fuels have intensified, and groups like Extinction Rebellion have become more prominent.
Environmental groups have demanded governments take action in cutting their carbon emissions, and have welcomed the decision. “Hats off to the European Investment Bank and those countries who fought hard to help it set a global benchmark today,” said Sebastien Godinot, an economist at the World Wildlife Fund.
Andrew McDowell, the EIB’s vice-president responsible for energy, said: “This is an important first step – this is not the last step.” He added that the bank wants to “set the standard” for banks who want to align themselves with the Paris climate agreement.
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