The Bankwatch study shows that since then the EIB has significantly increased its lending for renewable energy, with commitments totaling EUR 13 billion for 2007-2010. Yet, over the same period, the bank compromised this performance by lending EUR 16 billion for fossil fuel projects, one third of the institution’s total energy lending. While the EIB’s renewable energy lending more than tripled in the researched period its fossil fuel lending almost doubled from EUR 2.8 billion in 2007 to EUR 5 billion in 2010.

Breaking down these energy lending volumes further, there is further cause for alarm especially in central and eastern Europe. In the new member states the EIB supported mostly high-carbon energy sources (64 percent of new installed capacity), that of course traps these countries in unsustainable energy systems.

When it comes to EIB support for fossil fuels based energy generation in the EU, this sector is dominated by financing for natural gas, considered to be a ‘transition fuel’ as it has a much lower carbon footprint than other fossil fuels such as coal and oil. However, again in the new member states, EIB lending for electricity generation has been focused on coal power plants which received more than double the level of funding support received by natural gas power plants, and only marginally less than renewable energy and large hydro power plants counted together. These figures includes support for such projects as the Šoštanj lignite power plant in Slovenia, that will almost account for the country’s entire carbon budget for all sectors, and the 50 megawatts Bielsko Biala power plant in Poland.

The EIB’s justification for investments into coal power plants is based on the “security of supply consideration”, however this should be approached with caution. Adopted in 2007 by EU heads of state, an action plan entitled ‘An Energy Policy for Europe‘ provided guidance on actions for ensuring security of energy supply in the EU. This joint EU strategy, however, does not mention investments in coal power plants as a way of promoting energy security. Where coal is still considered by the EU strategy as part of the energy mix involves the development of international research for much cleaner coal and carbon capture and storage technologies to be fitted at power plants. None of the EIB’s coal power plant projects meet these common policy objectives. On the contrary these projects may undermine the remaining EU energy policy pillars: sustainability and competitiveness that both emphasise investment in energy efficiency, renewable energy and new technologies as the common EU response to energy and climate challenges.

While they can be said to support the energy strategies of individual states, the EIB’s loans to coal power plants fly in the face of the EU’s common energy policy ambitions.

An opportunity to address this conflict will come later this year with the revision of the EIB’s energy lending policy: how can the EIB’s financial clout be used to financially support an EU energy policy that is now setting even more challenging objectives to tackle climate and decarbonise the EU’s economy. One thing is for sure: the new policy must include much clearer priorities for the EIB and make projects such as Šoštanj absolutely off limits for the EIB.

Find out more about the EIB’s energy lending by accessing the Carbon Rising report at: https://bankwatch.org/publications/carbon-rising-european-investment-bank-energy-lending-2007-2010

See also a new Bankwatch map that vividly illustrates how fossil fuel and renewable energy lending compare at both the EIB and the EBRD: https://bankwatch.org/ifi-energy-lending