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In a new draft policy, the bank pledges to ditch the funding of fossil infrastructure projects by the end of next year

One of the biggest good news stories of recent days, which went largely under the radar, was an announcement on Friday by the European Investment Bank (EIB) to ditch the funding of fossil infrastructure projects by the end of next year.

As heat records are broken across the continent, and alarm bells are rung by EU scientists about the dangers of the climate emergency, one might think this move could have already been done, especially considering the mission of the EIB is “to make a difference to the future of Europe and its partners by supporting sound investments which further EU policy goals”.

But let’s not quibble - this is to be welcomed.

In December 2018, the bank had launched a public consultation on its energy lending policy, days after announcing, alongside the other multilateral development banks, that they intended to make their investment portfolios consistent with the 1.5ºC climate target enshrined in the Paris Agreement.

Friday was the big day that the results of the consultation and the Bank’s draft energy lending policy were published.

Most exciting was the EIB’s pledge that: “The Bank will phase out support to energy projects reliant on fossil fuels: oil and gas production, infrastructure primarily dedicated to natural gas, power generation or heat based on fossil fuels. These types of projects will not be presented for approval to the EIB Board beyond the end of 2020.”

While the danger of coal for the climate is widely recognised, there are still those (especially in the oil and gas business) who argue that gas is a bridging fuel that can smooth effortlessly the transition from coal to low-carbon energy forms.

In fact, oil and gas production and transportation leak a lot of methane, a greenhouse gas 86 times as powerful as carbon dioxide over a twenty-year time horizon.

And burning natural gas also results in considerable carbon dioxide emissions, albeit at lower levels than coal. With carbon budgets compatible with the 1.5ºC goal being very tight – we need to roughly halve global emissions by 2030 – investing in fossil fuels is desperately irresponsible.

With this announcement, the EIB has moved a considerable way towards meeting scientific imperatives and strong calls by civil society to be fossil fuel-free in its investments. The report of the consultation noted that “the vast majority of civil society organisations, including in the three petitions totalling more than 30,000 signatures, called on the EIB to stop financing fossil fuels.”

The draft policy takes the bank even further in the right direction than the World Bank’s fossil policy, which had been doing fairly well against other MDBs on policies to restrict finance to fossil fuels.

In December 2017, the World Bank Group blazed a trail with its policy of no longer investing in upstream (i.e. exploration and production of) oil and gas. The EIB draft policy covers all aspects oil and gas for energy – including its transport and combustion, not just its exploration and production.

But there is a caveat. The draft energy lending policy is just that – a draft.

The bank’s Board of Directors will be discussing the draft policy on September 10, and this welcome proposal needs to have their stamp of approval to actually become EIB policy. The board needs to show climate leadership and turn that draft into reality.

Katherine Kramer is global climate lead and Joe Ware is communications manager for news at Christian Aid.