Ahead of the European Investment Bank’s annual governors’ meeting, several EU’s finance ministers put forward a joint non-paper “Climate for the future of Europe” with an idea to transform the EIB: make green financing its top priority and promote investments in energy and climate transition. The right initiative risks failing if not supported by the majority of the bank’s shareholders, in particular by the eastern states that wrongfully fear that EIB’s increasing ambition in climate finance will unfavorably impact the bank’s presence in their countries.
Anna Roggenbuck, EIB policy officer | 13 June 2019
Disruptive action by 350.org at the European Investment Bank demanded end to fossil fuels investments on June 7, 2019
This fear of losing on the EIB’s low-interest and attractive maturity loans, if climate investments dominate the bank’s spending strategy, is unnecessary but understandable. The EIB’s climate operations have been rather marginal in the eastern states. So far, the EIB has been unable to tap into the region’s vast potential in increasing energy efficiency and renewable energy.
Our past findings clearly show that the EIB’s climate action varies across the states. For example, in 20 member states – 10 of which are the eastern states – the EIB’s share of energy efficiency and renewable energy investments was below the EU’s average.
Within the EU, the bank invested billions in fossil fuels projects – mainly in Italy, Spain and the UK – which blatantly contradicts Europe’s climate goals. Research shows, Europe must stop fossil fuels infrastructure development plans now. Any further investments of this kind will end up as a stranded asset instead of bringing prosperity and environmental benefits.
Suspending fossil fuels financing and stepping up climate action is an opportunity to boost the EIB’s green financing, especially in central and eastern Europe.
First, the Bank and its shareholders should critically examine its business model, which at the moment favours big projects in transport, energy and industry sectors. This model does not correspond to the needs of modern transformation in central and eastern Europe. The initiative to reshape the EIB and its priorities is a chance to adapt and redirect EIB’s financing to energy transformation based on innovative technologies in energy efficiency and renewable energy.
Right now the EIB is reviewing the energy policy which should eliminate its support for fossil fuels, but reducing greenhouse gas emission requires a comprehensive approach from multiple financial policies, such as budgeting, fiscal stimulations, procurement procedures, public finance management and financial sector regulations.
The intervention of finance ministers who decide the fate of the EIB’s credit policy is prerequisite to bringing the bank on the right track to fight climate change, energy poverty, air pollution and upholding the EU’s prosperity.
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