Energy and climate - financing the energy shift to stop climate change
Investing in true solutions for the challenge of climate change – solid renewable energy projects and energy efficiency schemes – is in countries' interest, in the environment's interest, and it is in the EU's economic interest.
Carbon dioxide concentrations transported around Earth by atmospheric circulation. (NASA/JPL)
Climate change is one of the most serious risks our world is facing, including the economic, social and environmental disruptions it would create. Phasing out fossil fuel based energy production by shifting to renewable energy and increasing energy efficiency are core solutions to the issue.
Such vital, radical change involves a revolution in how the world’s economies are organised and fuelled. This cannot happen without proper stimulation.
International financial institutions can and should make use of their financial leverage and clout to provide incentives for renewable energy and energy efficiency investments.
But they often fail to do so.
With a focus on EU Structural and Cohesion Funds, the European Investment Bank, and the European Bank for Reconstruction and Development, Bankwatch challenges these institutions to finance more than a few green showcase projects, but to support solutions for decarbonising the energy sector.
Energy efficiency and innovation
There is enormous potential to reduce energy consumption, particularly in central and eastern Europe:
- in the EU, energy consumption could be reduced by 44% as soon as 2030 through efficiency measures.
- This number might be even bigger for non-EU countries of the former eastern block where energy intensity is very high and energy efficiency measure lack financial support.
While the technical solutions are readily available (thermal insulation of buildings, efficient appliances, energy improvements in industrial production), energy saving measures are economically (and politically) less attractive and funding is hard to come by.
It is international financial institutions and governments who should step in to promote energy efficiency as the first priority in energy policy and funding.
Renewable energy sources and smart grids
Promoting renewable energy promises to bring energy security, create new jobs and break the spell of our fossil fuel addiction.
Nevertheless, international financial institutions still invest billions in unsustainable energy production and do too little to facilitate renewable energy:
- the lending of both the European Bank for Reconstruction (pdf) and the European Investment Bank (pdf) has not only lacked clear commitment to green energy, but has even seen a growth in fossil fuel projects in recent years
- EU funding (pdf) still is far away from fulfilling its potential to inspire a change in EU member states' energy policy
To increase renewable energy production and its distribution and regulation through smart electricity grids, financial support as well as a new set of policies will be necessary.
Bankwatch calls on the IFIs, the EU and its member states to respond to this necessity and eventually help consumers to gain more control over the energy system and their energy consumption.
Two European public banks are currently reviewing their energy lending policies. We call for an end to coal subsidies.