European Investment Bank postpones decision on ending fossil fuel financing

The European Investment Bank (EIB) has postponed its decision on whether it will continue financing projects dependent on fossil fuels. The dispute centres primarily on financing projects linked to natural gas, backed by countries led by Poland and Germany.

Projects associated with fossil fuels, particularly coal- and gas-fired power plants, face another serious risk. Although no final decision was made at Tuesday’s meeting of the European Investment Bank on whether the bank would continue supporting fossil fuel projects, a decision is expected at the next meeting in November.

Under the leadership of Werner Hoyer, the European Investment Bank is set to take a leading role in financing sustainable projects. It was in connection with this strategy that a proposal was put forward in July this year for the bank to stop financing projects linked to fossil fuels.

The EIB also has support in its plans from incoming European Commission President Ursula von der Leyen, who wanted to turn the EIB into a “climate” bank tasked with financing the transformation of the economy into a low-carbon economy.

Oil and natural gas extraction projects, as well as coal- and gas-fired power plants, could therefore lose access to EIB financing. Natural gas is at the centre of the biggest dispute, as a number of countries, including Poland and Germany, see it as a transitional power source that could help end dependence on coal while renewable energy sources and electricity storage systems are developed.

Representatives of Germany, Poland, Italy and Latvia have backed support for projects linked to natural gas. An EIB vice-president said postponing the decision would allow the bank to adopt certain specific rules for selected countries.

It can therefore be assumed that some countries will face less stringent conditions. This could include Poland, which faces a challenging energy-sector transformation process if it is to substantially reduce emissions produced by its power sector.

In the past year alone, the EIB helped finance projects worth around EUR 2 billion. Since 2013, it has financed a total of EUR 13.4 billion, with more than EUR 9 billion going to the natural gas-related projects under discussion (i.e. around two-thirds of all funds),