World’s largest public financial institution halts lending to dirty coal

• July 24, 2013
lending to dirty coal

The World’s larges public financial institution has turned its back on dirty coal plants. Creative Commons: Martin Nikolaj Bech, 2007

Green groups have cautiously welcomed an announcement from the European Investment Bank (EIB) today, which says the bank will introduce new lending criteria to rule out coal projects.

The EIB – the world’s largest public financial institution – says it will introduce an Emissions Performance Standard (EPS) for new energy projects, setting an emissions limit of 550 grams of carbon dioxide per kwh, effectively ruling out support for dirty coal and lignite power plants.

Mihai Tanasescu, European Investment Bank Vice President responsible for energy lending said:

Prioritising lending to energy efficiency, renewable energy, energy networks and energy RDI projects will help EU to meet its energy and climate objectives and create local employment across Europe. The new Emissions Performance Standard will ensure that outside these sectors the Bank’s energy lending makes a sustainable and positive contribution to economic growth.

They say the limit reflects “existing EU and national commitments to limit carbon emissions”, yet some directors present at the meeting pushed for an even higher performance standard of 450 CO2/kWh.

Ingrid Holmes, Associate Director at E3G

The vote to introduce an EPS represents a stepchange in the EU’s fight against climate change – and puts the bankers ahead of politicians in terms of tangible action. With several Directors pushing for 450gCO2/kWh at the meeting, I’d expect to see it tightened further over next 12 months, as the politics of the EU’s broader approach to 2030 targets is settled.

WWF say the standard, if implemented correctly, will rule out the dirtiest projects but are now calling on the bank go further.

Sebastien Godinot, economist at WWF’s European Policy Office said:

The move by the EIB is very welcome but more needs to be done. To have a serious chance at staying within the 2°C climate change limit in Europe by 2050, the EIB should strengthen its standards and eventually phase out its support for all power supply based on fossil fuels. Coal is the dirtiest of fossil fuel power sources – polluting local environments, impacting on people’s health and contributing heavily to climate change.

Green groups have also raised concerns that two loopholes in the new standards being introduced could allow funding for coal plants to continue if they either “contribute to the security and supply” within the EU or “to poverty alleviation and economic development” outside of the EU.

The board of directors are in the process of clarifying these exceptions to ensure they do not derail efforts to phase out lending to unabated coal plants.

The latest announcement follows last week’s “historic decision” from the World Bank to limit its funding for coal power plants to “only rare circumstances” and builds on the growing number of financial institutions moving away from dirty sources of energy.

Having lent around €11 billion to fossil fuel plants since 2007, the EIB has long been a target for campaign groups, and last month EU Commissioner for Climate Action, Connie Hedeggard, added her voice to the growing chorus.

She called on the EIB, the World Bank and the European Bank for Reconstruction and Development (EBRD) to halt lending to fossil fuel projects.

These institutions are collectively responsible for around a $130 billion lending pot and nearly $37 billion in coal finance over the last five years.

With the recent announcements from both the World Bank and the EIB, attention has now turned to the EBRD as it presents its new energy strategy in London tomorrow.

While a draft proposal shows criteria for lending tightened, campaigners warn there is still room for the Bank to continue lending to the “very dirty coal projects” and are calling on the EBRD to “follow the EIB’s example, and to clean up their act too.

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