Report: Oil-friendly lending undermines EU climate goals

The European Investment Bank (EIB) is undercutting the EU’s efforts to cut carbon emissions and fight climate change by continuing to provide heavy financial support to oil, gas and coal projects, according to a new report from CEE Bankwatch Network.

The report, “Change the lending, not the climate,” finds the EIB’s policies undermine the EU’s efforts to pledge a credible 20 per cent cut in greenhouse gas emissions at next week’s climate talks in Copenhagen.

Between 2002 and 2008, the EIB loaned €18 billion in support of oil, gas and coal projects, according to the report. The report also notes that the small rise in the EIB’s renewable energy investments since 2006 has been largely nullified in climate terms by a sharper rise since 2006 in the bank’s loans for gas power plants, pipelines and liquified natural gas terminals.

While the EIB’s still incomplete energy lending record in 2009 is shaping up to be more favourable for renewable investments, the carbon footprint of past and current EIB loans persists in undermining EU climate and energy targets, according to Bankwatch.

“Our analysis presents a stark picture of EIB energy lending from 2002 up to the end of last year,” said Katerina Husova, climate coordinator at Bankwatch and a co-author of the report. “On average since 2002, for every million spent on renewables, the EIB has provided 3.3 million to oil, gas, coal, nuclear or large hydro.

“This massive ongoing support for fossil fuels and unsustainable energy sources from the pockets of EU taxpayers seriously hampers EU efforts at the global climate negotiations in Copenhagen next week. While the EU attempts to position itself as a climate leader, it has not yet been able to present a credible position on taking sharp and rapid domestic cuts in GHG emissions. The 20 per cent target, potentially increased to 30 per cent under unclear conditions, is still well short of the scientific requirements and assumes a heavy supply of credits coming from reductions to be achieved in developing countries.”

Husova continued, “The EU is asking developing countries to show their mitigation plans, but is still unable to get its own backyard clean. Yet the EU has at its disposal the lending power of the EIB. There has never been a more opportune moment to move the EIB onto a renewables and energy efficiency only path.”

Drawing on analysis of all the publicly available data on the EIB’s energy lending for 2002-2008, the report also describes the difficulties involved in analysing the EIB’s lending for energy efficiency measures. The EIB does not provide solid data on its energy efficiency lending even though it is widely recognised as the prime economic, anti-crisis and energy security measure, especially in the central and eastern European region where the potential for reducing energy waste is the highest in the EU.

“The bulk of the EIB’s climate-friendly energy lending tends to concentrate on the EU’s core old member states, while so far we have seen only small amounts going to renewable and efficiency loans in the new member states and even smaller, if any, climate-proof investments as part of EIB lending outside the EU,” Husova said.

“If taking tough measures to keep climate change at safe levels is one of the key priorities of the EU, the dominance of dirty energy lending at the EU’s own public bank has got to end. There is no compromise way out of the looming climate change crisis. We either want to become carbon neutral, or we continue to keep gambling with gas, coal and such unproven technologies as carbon capture and storage, and pretend that they address energy security concerns better than energy efficiency and renewables. The key step for the EIB is to adopt a plan to phase out its fossil fuel lending. This is crucial to achieve EU targets, it is crucial to save the EU’s credibility at the climate negotiations, and it is crucial for kick-starting a low-carbon economy across all of Europe.”