It can not be said that shareholders would have liked to turn their traditional investment bank into a fossil-free, green house of money. Well over nine hours and into the evening, the 28 EU Member States negotiated on Thursday at a meeting in Luxembourg. Then the decision was made: as of 2021, the European Investment Bank (EIB) will no longer support fossil energy projects with loans. This was announced by EIB Vice-President Andrew McDowell.
The exit from the support of fossil fuels comes thus a year later than originally planned. Former FDP General Secretary Werner Hoyer, chairman of the EIB, announced in the summer that he wanted to make his institute a "climate bank" to help the EU achieve its goals. Since 2013, the EIB has stopped sponsoring coal-fired power generation projects. Now, in two years' time, gas will also be put on the exclusion list - making the bank fossil-free.
The decision is enshrined in the new EIB funding rules. There it is now planned that for each kilowatt-hour of electricity produced, only 250 grams of CO2 may be used if a project is to be supported. For gas power plants, the value is usually higher. The EIB limit has so far been 550 grams.
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Initial resistance also from Germany
Among the EU Member States, however, there was initially opposition to the move, for example from Poland, Romania and Hungary. The Federal Government also acted as a brakeman in recent weeks, but finally agreed after a transitional period of two years was negotiated in the original draft: natural gas and other climate-damaging energies may still be supported until 2021.
Last year, the EIB lent 60 billion euros. This puts it just ahead of the World Bank, just behind the German Kreditanstalt für Wiederaufbau (Reconstruction Loan Corporation) and is one of the world's largest interstate lenders. The EIB is also the largest public donor to gas projects in the EU.
The bank receives its capital from the member states, the sum depends on the economic power of the respective country. As a major donor, Germany has particular weight: Last year, the federal government contributed around 5.5 billion euros. The main shareholders are France, Germany, the United Kingdom and Italy, each with 16 percent.
However, the end of the EIB loans will not be enough for gas projects in Europe for a long time: the European Commission is continuing to promote climate-damaging energy sources. For example, about their fund CEF. It awards guarantees and "project bonds", which in turn make it easier to get private money for gas projects. The reason: The European Investment Bank makes its decisions independently of the Commission. This, in turn, has no say in the decision of the EIB.
The world's largest banks continue to promote fossil fuels on a grand scale
Over the past few years, the EIB has spent around € 13 billion on gas projects. Just for the Southern Gas Corridor, last year it financed a 700 million euro pipeline from Azerbaijan to Italy to make Europe less dependent on Russian gas.
The move by the EIB could now also signal for other institutions, because so far only a few banks have withdrawn from the fossil business. According to a recent report by the NGO "Banktracker", the world's 33 largest banks have lent $ 1.9 trillion in coal, oil and gas projects since the adoption of the Paris Climate Change Agreement. Since 2015, even from year to year more money flows into the development of climate-damaging resources, alone in 2018 around 650 billion dollars, according to the calculations of the NGO. After all, the World Bank had announced two years ago, no longer promote oil and gas projects.
The decision of the EIB is long overdue, says Claudia Kemfert from the German Institute for Economic Research. "If we want to achieve the climate goals of Paris, we can no longer invest in fossil fuels but only in sustainable and renewable projects". This also means an exit from fossil natural gas. "The EIB must become the instrument of the European Green Deal," says Kemfert.
Regine Richter from the environmental NGO Urgewald also praises the decision as pointing the way forward, because now gas is also considered to be what it is: A fossil fuel whose use must be drastically reduced in the coming years in recognition of the climate agreement in Paris. "Especially in Germany, the gas industry is trying to present itself as a solution to the challenge of climate protection," says Richter.
more on the subject
Gas as bridge technology?
The European gas companies are currently doing a lot to promote their energy as more climate-friendly compared to other fossil fuels. A specially developed advertising campaign promotes gas as a transitional technology, which is necessary until a stable full supply of renewable energies is achieved.
But natural gas, like all fossil energy sources, must be taken out of the earth, transported and then burned to produce electricity or heat. Looking at the CO2 emissions from burning coal or lignite and gas alone, natural gas is the most climate-friendly. However, natural gas production and transport releases harmful methane. According to the IPCC, gas is responsible for about a quarter of man-made global warming and damages the climate 100 times more than carbon dioxide. Scientists calculated that reaching the Paris climate targets would require up to 50 percent of Earth's known gas reserves to remain in the ground.