The 28-nation EU wants to step up its climate ambition in sync with the landmark 2015 Paris agreement to fight global warming, after the US turned its back on the accord. With EU leaders considering committing to climate neutrality by 2050, Europe is a step ahead of other major emitters, including China, India and Japan, which haven’t, so far, translated their voluntary Paris pledges into equally ambitious binding national measures.
“For the EIB to stop funding fossil-fuel projects is a game-changer that begins to deliver the EU’s vision for climate leadership as laid out in the green deal,” said Eliot Whittington, director of the European Corporate Leaders Group. “We need this to act as an unequivocal signal to the financial system to encourage other multilateral lenders to follow suit.”
Von der Leyen, who is due to assume her new job as head of the EU’s executive arm in the coming weeks, also wants the bloc to raise its current target of cutting emissions by at least 40% by 2030 from 1990 levels. That may involve a reduction in pollution in the order of 50% or even 55% to counter the more frequent heat waves, storms and floods tied to global warming. Fossil fuels such as coal, oil and natural gas are leading contributors to climate change.
The EIB deal resolved a two-month deadlock where Germany and some central European nations sought to soften the proposed rules and make certain natural-gas projects eligible for financing. The strategy adopted on Thursday allows for continued support for projects already in the works that are vital for Europe’s energy security, as long as they are appraised and approved by the end of 2021.
“Hats off to the EIB and those countries who fought hard to help it set a global benchmark today,” said Sebastien Godinot, economist at the environmental lobby group WWF Europe. “All public and private banks must now follow suit and end funding of coal, oil and gas to safeguard investments and tackle the climate crisis.”
The new EIB policy includes an emissions performance standard of 250g of carbon dioxide per kilowatt-hour, replacing the current 550g standard. That means to qualify for financing, new power-generation projects have to be mitigated by various technologies that significantly improve their emissions performance, EIB vice-president Andrew McDowell said in a conference call.
The EIB, which invested more than €16bn in climate-action projects in 2018, is preparing to play a larger role in spurring low-carbon technologies.
“This is not a last step, there are many more steps to come,” McDowell said. “But this is probably one of the most difficult parts of this journey that we’re having to take.”