Europe’s largest lenders take small steps away from fossil fuels
...but while these steps might be in line with policy, they’re far from the realities of science and justice.
Photo: The EBRD is based near Liverpool St, London. Not surprisingly, London is also home to one of the world’s biggest stock exchanges, most heavily invested in fossil fuels.
There has been a lot of talk over the last few weeks of big public financial institutions altering their lending policies, looking to phase out support for fossil fuels. These mainly positive developments have been cautiously welcomed by climate campaigners. Although they show increasing alignment with EU policy designed to mitigate climate change, they are far from what science and justice demand.
Recently, the World Bank amended its lending policies for new coal-fired power projects, restricting financial support to countries that have "no feasible alternatives" to coal. Arguing that funding coal-fired power plants is sometimes necessary to bring energy to the world's poorest nations and help eradicate poverty, they fail to explain why this goal couldn’t be equally achieved with clean, renewable energy infrastructure.
This week, the European Investment Bank (EIB), the world's largest public financial institution, announced that it would be applying an Emissions Performance Standard (EPS), to all new fossil fuel projects. While this is an encouraging step in the right direction and it’s likely that an EPS of 550g CO2 per kWh will initially rule out the dirtiest forms of coal, a target of 350g CO2 per kWh, is what’s needed to show serious intent to rise to the challenge of climate change.
The EIB announcement also introduces exemptions that will leave the door open to business as usual, more coal and other extreme fossil fuel projects such as fracking – none of which are compatible with a world under 2 degrees of warming. The EIB draft policy states that when “a [coal] plant contributes to the security of supply” within the EU or when “it contributes to poverty alleviation and economic development” outside of the EU, it might well be eligible for funding.
Energy poverty is often cited as justification for building new coal plants in poor countries, however the extent to which they have an impact on energy access and security of supply is questionable. It is in countries where rural communities make up a significant proportion of the population that impacts, such as respiratory illness and loss of land and livelihoods, of fossil fuel energy projects are primarily felt. Large scale, centralised, dirty power from coal tends to benefit industry before people. Whereas decentralised, community owned renewable energy seem to make much more sense in both terms of access and security of supply.
We know that to avoid the extreme worsening of the climate crisis we have to leave 80% of the fossil fuels we already have access to in the ground. Recently, Connie Hedeggard, EU commissioner for Climate Action, called on the EIB, World Bank and European Bank for Reconstruction and Development (EBRD) to divest from fossil fuel projects. Combined, these institutions are responsible for $130 billion of lending, of which $37 billion has been given to coal projects over the last five years.
With the recent announcements from both the World Bank and the EIB, it’s perhaps now time to turn attention to the European Bank of Reconstruction and Development (EBRD) as it hears comments from various stakeholders on its new draft energy strategy in London today. 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 World Bank and EIB’s example, and to clean up their act too.”
Over the coming months, as the divestment campaign catches on across Europe, we’ll be looking to work closely together with our friends and allies across Europe, including Bankwatch, Counterbalance, Re:Common, Urgewald and many more to help put an end to use of public money for the development of fossil fuel projects.
Join our mailing list and keep up to date with our work and opportunities to get involved as they develop.