The European Investment Bank (EIB) has balked at a proposal to halt new investments in fossil fuels, raising concerns that Germany and other nations are plotting to water down what would be one of the financial sector’s most ambitious climate moves.
The EIB, the largest public bank in the world, announced this year that it would end lending to new gas projects, having already curtailed funding for coal and oil. This would free up more money for renewable energy developments. The details of the plan were expected to be confirmed by a board meeting of EU finance ministers on Tuesday but last-minute lobbying has forced a postponement.
Executives of the bank, which is owned by EU member states, said the plan was still on course and would probably be approved next month.
“The new energy lending policy is a milestone on the EIB’s road to transform itself into the EU Climate Bank. I am pleased about the important progress made today and am confident of securing a final approval in November,” said Andrew McDowell, the EIB vice-president responsible for energy.
But climate campaigners fear the measures will be delayed further and weakened.
“This delay is a direct result of Germany and the European commission pushing to add more fossil fuels back into the policy. This is the opposite of the leadership demanded by millions of climate strikers and activists around the world,” said Alex Doukas of the NGO Oil Change International. “We are in the middle of a climate emergency, so it shouldn’t be hard to say no to more public money for fossil fuels.”
Between 2013-17, the EIB provided almost €12bn (£10.4bn) in loans to fossil fuel projects, almost all for gas. Supporters of the gas industry argue it is a “transition” fuel that reduces demand for higher-carbon oil and coal while providing energy security. Climate campaigners say gas projects release high levels of methane, which has a far greater greenhouse effect than carbon dioxide, and that they will delay the transition to zero-carbon renewables such as wind and solar power.
The EIB says it has provided more than €65bn of new financing for renewable energy projects, but the bank’s president, Werner Hoyer, has called for more urgency. “We believe that gas emissions are too high and cannot be maintained. We must move out of these fossil fuels. We are aware it takes a transition period. We are aware that it takes help for the regions that are dependent on coal and gas. But one should not hide behind these arguments in order to perpetuate the use of these types of materials,” he said in a recent interview.
EU leaders plan to describe global heating as an “existential threat”, according to a leaked copy of a summit communique, but there are divisions over the speed of action. Poland and Hungary are among a handful of countries that oppose the setting of an EU-wide zero-carbon target by 2050. Germany reportedly believes gas is necessary for energy security, at least on an interim basis as it moves away from coal and nuclear power.
The clamour for urgent action is increasingly loud, spearheaded by Greta Thunberg, student climate strikers, Extinction Rebellion protesters and influential establishment voices such as David Attenborough and the Church of England. Scientists warned last year there was little over a decade to transform energy systems if the world was to have any chance of keeping global heating to a relatively safe level.
Yet the world of finance continues to move in the opposite direction, particularly in the private sector. In a weeklong investigation, the Guardian revealed the world’s largest investment banks and asset management companies had aggressively expanded into new coal, oil and gas projects since the 2016 Paris climate agreement. The governor of the Bank of England, Mark Carney, has warned that many of these assets will be left stranded, leading to bankruptcies and a growing risk of a global financial crash.