European Investment Bank cancels funding on fossil fuels

fossil fuels

According to a latest report, the European Union will withdraw from funding gas, oil and coal projects at the end of 2021. The news include a report of cutting €2bn of yearly investments.

Sources allege the funding for fossil fuel projects will be stopped by the European Investment Bank (EIB) and from the EU’s financing department.

Based on reports, the ban will come into effect a year later than it was originally proposed after the lobbying by EU member states. Based on sources, the EIB has funded €13.4 bn of fossil fuel projects since 2013. In 2018, it funded projects worth €2bn.

Energy projects that apply for the EIB funding will also require to prove that they can produce one kilowatt hour of energy while emitting less than 250 grams of carbon dioxide. Experts allege, this is a move which does not include traditional gas-burning power plants.

The probability of gas projects is still possible but it is based on what the banks call “new technologies”, which include carbon capture and storage, mixture in renewable gases with fossil natural gas, and combination of heat and power.

In the wake of the situation, the EIB’s vice-president, Andrew McDowell said, “This is an important first step – this is not the last step.” McDowell is responsible for energy.

Fairly common in EU member states, gas projects are regarded as an alternative for coal and oil and as a transition of countries from fossil fuels.

According to reports, environmental organizations welcomed the EIB decision, although the one year delay has been a disappointment.

The EIB’s decision has come after the EU finance ministers’ unanimous decision to back out from phasing the funding of fossil fuel projects. The decision on funding was postponed last month owning to divisions within the bloc. This was attributed to some countries who wanted the gas funding to continue.

This was one of the main reasons which prompted McDowell to write a letter to 28 shareholders of the bank’s current EU member states.

Sources suggest, the EIB has ambitious targets for sustainable finance. The bank allegedly wants to “set the standard” for what it meant for banks to be in agreement with the Paris climate agreement.