EBRD puts emissions target on energy lending

18 May 2012, Environmental Finance

The European Bank for Reconstruction and Development (EBRD) has announced a greenhouse gas emissions reduction target for the investments made in the 2012-14 phase of its sustainable energy initiative (SEI).

Lending to energy efficiency and renewable energy projects will rise approximately 25% to €4.5 billion-€6.5 billion ($5.7 billion-$8.3 billion) for the three-year period, up from €8.8 billion over the previous six years.

Launching the third phase of the SEI at the EBRD’s annual conference in London today, Josué Tanaka, managing director for energy efficiency and climate change, said that, for the first time, the bank has introduced an emissions goal for its investments of annually reducing 26 million-32 million tonnes of carbon dioxide equivalent (MtCO2e).

In the previous six years, the bank’s 464 investments in energy efficiency and renewables avoided annual emissions of 46.9 MtCO2e.
Pure carbon reduction approach is inappropriate

Tanaka acknowledged that the emissions saved per euro spent was no more ambitious than in the previous six years. However, raising the target would mean shifting the EBRD’s focus into certain sectors, and away from its role in financing energy efficiency across the economy and in all the ex-Soviet and Mediterranean countries where it operates.

For example, he said the bank could implement numerous projects to reduce gas flaring in Russia’s oil and gas sector, which would bring significant emission reductions. However, it would be at the expense of, for instance, residential energy efficiency programmes (see below).

“There are several reasons for us not to take a pure carbon reduction approach,” Tanaka said.
NGOs highlight lending to fossil fuels

However, NGOs continue to take the EBRD to task over its lending to the fossil-fuel sector. Analysis by Bankwatch says that almost half of the bank’s energy lending over the past six years has been to support fossil fuels.

“Support for coal and, to a lesser extent, for oil, has generally increased over the past six years, at a time when precisely the opposite trend should have been noted,” said Pippa Gallop, Bankwatch research coordinator. While commending the bank’s recent efforts to raise its renewables lending, the NGO says that it should immediately halt coal-sector investments and phase out fossil fuel investments altogether.

Investments under the SEI have been used to replace old coal-fired power plants with new ones, it noted. “When global greenhouse gases should start to fall before the end of this decade, naming construction of an efficient coal power plant as part of a sustainable energy initiative is an ironic joke,” said Bankwatch climate and energy coordinator Piotr Trzaskowski.
Moldovan residential programme launched

Meanwhile, the EBRD today launched a €35 million facility to help households in Moldova reduce energy consumption and cut bills. The first credit line extended under the Moldovan Residential Energy Efficiency Financing Facility is a €3 million loan to BCR Chisinau bank to on-lend to customers seeking to invest in energy efficient appliances, thermal insulation, boilers and heat pumps. Project development is being supported by grant funding of €2.3 million by the Swedish International Development Cooperation and €5 million from the EU Neighbourhood Investment Facility.