New Challange for Gas Industry: EIB Ceases to Fund Fossil Fuel Projects

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(Newswire.net — November 17, 2019) — Brussels – The European Investment Bank (EIB) will stop financing fossil fuel projects by the end of 2021, the bank said.

The bank’s new energy sector lending policy, which the EIB said was adopted with “overwhelming” support, will include a ban on co-funding a large part of fossil fuel projects, including traditional use of natural gas, Reuters reports.

“This is an important first step – this is not the last step,” EIB vice president, Andrew McDowell told reporters in a call.

From 2021 onward, energy projects applying for EIB financial support will have to show that they can produce one KWh of electricity while emitting less than 250 grams of carbon dioxide, a criteria that disqualifies traditional gas power plants, according to the UK agency.

The policy brings new risks to the gas industry, which has planned more than $200 billion worth of natural gas projects worldwide over the next five years, with a goal of providing a cleaner alternative to coal and oil.

Under the new EIB policy, gas projects should be based on “new technologies”, such as “capture” and carbon storage, to combine the next generation of electricity and heat or the mixing of renewable gases with natural fossil gas.

Environmental organizations welcomed EIB’s decision but expressed disappointment that its implementation would be delayed by a year because of lobbying by EU member states. The decision to ban the financing of fossil fuel projects was planned last month, but was delayed due to intra-block divisions, as some countries sought to continue financing gas projects.

As a result, McDowell sent a letter to EU Member States, the current shareholders of the bank, on November 5, suggesting that the original deadline for cessation of lending to fossil fuel projects proposed by the European Commission should be postponed from the end of 2020 to the end of 2021. .

The European Commission has only an observational role on the EIB board, but the EU executive has the right to a “golden vote”, that is, the last word when voting on a decision among the current 28 shareholders of the bank west in a “dead end”.

The EIB said there was no need for the team now, as members representing 90 percent of the bank’s capital approved a new energy lending policy.