The European Investment Bank (EIB) said on Thursday that its new energy lending policy, which was approved with "overwhelming" support, will bar funding for fossil fuel projects from the end of 2021.

"We will launch the most ambitious climate investment strategy of any public financial institution anywhere," the EIB's president, Werner Hoyer, said in a statement.

Read more: The role of the business sector in tackling the climate crisis

Energy projects applying for EIB funding will need to show they can produce one kilowatt hour of energy while emitting less than 250 grams of carbon dioxide, a move which bans traditional gas-burning power plants.

Gas projects are still possible, but would have to be based on what the bank called "new technologies," such as carbon capture and storage, combining heat and power generation or mixing in renewable gases with the fossil natural gas.

"This is an important first step — this is not the last step," the EIB's vice president, Andrew McDowell told reporters in a call.

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Combating climate change

The ban on funding will come into effect a year later than originally proposed after lobbying by European Union member states, the bank's shareholders.

The policy change will also see the EIB prioritize lending for energy efficiency, low carbon technology and grid improvements. It comes at a time when the EU is trying to ratchet up its climate efforts.

Last week, EU finance ministers unanimously backed the phasing out of funding of gas, oil and coal projects to help combat climate change.

Earlier Thursday, German Foreign Minister Heiko Maas told diplomats and scientists in Berlin that "Europe must lead, because only then other countries such as China or India will stay the course too.''

Still, Germany was one of the countries which had resisted a complete end to fossil fuel funding by the EIB.

Read more: Does Germany's weak climate plan reflect a polarized public?

Conservatives in the German government wanted an exemption for natural gas infrastructure on the grounds that it can help wean countries off more polluting coal.

Environmental groups cautiously welcomed the EIB decision, but warned that it contains some loopholes for some gas projects.

The EIB, which is one of world's biggest public lenders, loaned €55.6 billion ($61.93 billion) in 2018.

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sri/rt (AP, Reuters)

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