Europe’s Climate Action Criticized Over EIB Fossil-Fuel Loans

12 December 2011, Bloomberg

The European Union was criticized for making 5 billion euros ($6.7 billion) of fossil-fuel loans through its financial arm, while pushing for a carbon-dioxide emission-cutting policy across the 27-member bloc.

The European Investment Bank, which loaned a record 19 billion euros to climate-related projects last year, increased its lending for fossil fuels such as coal to 5 billion euros in 2010 from 2.8 billion euros in 2007, according to a statement today from CEE Bankwatch Network, a Prague-based organization that monitors international finance institutions.

The group called on the bank to halt loans to coal plants immediately and to phase out lending for other fossil fuels or risk locking countries, particularly new EU member-states, into a “fossil-fuel dependent path” for decades. The EU hopes to reduce greenhouse gases 20 percent below 1990 levels by 2020, pushing for the cuts at climate talks this week in South Africa.

Fossil fuels accounted for most of the EIB’s energy loans, or 16 billion euros, in the four-year period studied by Bankwatch while new renewables received 13 billion euros of lending in that time, according to the statement.

The EIB, which is the largest international, non-sovereign lender and borrower, is aware of criticisms about fossil-fuel lending though it hasn’t seen the latest report from Bankwatch, said Richard Willis, a spokesman at the Luxembourg-based bank.

Production of hydrocarbons represented only 0.3 percent of the bank’s energy lending since 2005, he said by e-mail. The bank is the world’s biggest investor in climate action, renewables and water, according to Willis.

It has increased lending to renewables over the same four- year period as part of its fight against climate change, he said. The bank is part of the South African Renewables Initiative signed in Durban, host of the United Nations talks.

‘Secret Hypocrisy’

“While the EU appears to be the world’s most progressive actor in the global struggle against climate change, the financial arm of the union is putting billions of euros of public money into energy infrastructure,” said Piotr Trzaskowski, energy coordinator at Bankwatch.

The study highlights “the secret hypocrisy” of the EU’s climate action policy, the coordinator said.

The bank’s energy lending policy, adopted in 2007 to prioritize climate action and energy security, ensures a “selective approach” to coal and lignite plants, Willis said.

The EIB approved funding for two fossil-fuel plants, the Sostanj lignite power station in Slovenia and the Duisburg- Walsum coal station in Germany, under “old guidelines” yet no funds have been disbursed, Willis said.

Bankwatch said the EIB should revise the energy policy to rule out financing coal power stations and prioritize energy efficiency.

The EIB is only reviewing its transport-lending policy currently and seeks large-scale energy efficiency projects “continuously,” Willis said.