Arnold Paul
The European Investment Bank (EIB) has agreed to implement new lending standards that will skew heavily towards renewables and screen out nearly all coal and lignite plants, in a major development for the bloc's climate policy.
In a hotly anticipated and uncertain decision, the EIB’s board yesterday approved new lending criteria which include a Emissions Performance Standard that will be applied to all fossil-fuel generation projects.
The new standards – in line with current EU climate policy – would already effectively rule out coal and lignite plants, and the EIB says more restrictive standards may be imposed after further consideration.
Coming on the heels of the World Bank’s decision last week to limit funding to coal plants to “rare circumstances”, the move is hugely significant, both in practical and symbolic terms, in the push to decarbonise the electricity sector in the EU and beyond.
By far the world’s largest public bank, regularly lending more than €10bn ($13.2bn) a year to the energy sector, the EIB has acted as the financial lynchpin of many large EU renewables projects in recent years, particularly in the capital-intensive offshore wind sector.
Offshore wind projects which have benefited from cheap EIB loans in recent years include WPD’s Butendiek, EnBW’s Baltic 2 and the Northwind project in Belgium, which last week attracted Sumitomo of Japan as a major investor.
The Luxembourg-based EIB has loaned €1bn to Belgian offshore wind projects alone. It also lends outside of the EU occasionally, as evidenced by a recent €55m loan it handed to a hydroelectric project in Nepal.
Yet while the EIB has slanted ever more heavily towards renewables in recent years, it has also continued to finance fossil-fuel plants – including a highly controversial €650m loan made this spring to an unabated lignite plant in Slovenia, which led one observer to refer to the bank’s stance on emissions as “schizophrenic”.
Under its new rules, however, such loans would effectively be ruled out. The new lending criteria came as part of the EIB’s first energy-sector review since 2007, with consultations stretching over ten months.
The EIB notes that its lending to power projects requiring fossil fuels has “declined significantly” over the past five years, with coal and lignite stations accounting for less than 1.5% of its total energy lending during that period.
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