Will Fossil Fuel Investment Be Banned?

The European Investment Bank (EIB) has announced that it will be bring a stop to lending capital for fossil fuel-based projects from the end of next year. The decision has been made in order to bring its corporate strategy in line with its environmental goals and in the face of strong criticism of the €2.4 billion the bank invested in fossil fuel ventures in 2018.

Although oil, gas and coal companies will still be able to seek funding elsewhere, they will no longer be able to apply to the world’s largest multilateral lender for investment from the end of 2020. That’s a huge step in the right direction and the EIB will be hoping other banks and investment companies follow suit. “This transition will be profound,” said an EIB report on the subject. “Solidarity is required to ensure that potentially vulnerable groups or regions are supported.”

Funding fossil fuels

The EIB has a long history of investing in oil, gas and coal projects, culminating in a massive €2.4 billion spent in 2018. Incentives which benefited from EIB funds include the Trans Adriatic gas pipeline, which began construction in 2016 and will ferry gas from Greece to Western Europe, and the Vasilikos oil storage facility in Cyprus.

The UK government has also pursued a similar polluting line of investment in recent years, upping its financial support of fossil fuel ventures to a whopping £2 billion in 2018. Just short of the entire EIB’s fossil fuel investment portfolio, that represents an incredible eleven-fold increase from 2017, while renewable funding fell to a meagre £700,000 in the same time period.

The renewable revolution

Both strategies have drawn sharp criticism. The strength of European public opinion on industrial emissions and concerns that inaction now will lead to irreversible consequences further down the line had led to campaign group Counter Balance sending an open letter to the EIB and asking it to bring an immediate end to its funding of fossil fuel projects. The letter was signed by 80 academics and civil society organisations.

It now appears that the EIB has taken heed of the warnings and announced it will curtail its oil, gas and coal spending from January 1^st, 2021. It has also indicated it will offer support to companies looking to transition to cleaner forms of energy, with funds expected to be available for technologies such as biogas plant optimisation, photovoltaic solar panel innovations and wind turbine lubrication technology. It remains to be seen whether the UK government will follow suit.

Welcome news

The announcement has been welcomed warmly by the environmental community, who herald it is a pioneering move by one of the world’s largest financial institutions. A representative of Friends of the Earth Europe has called the decision a “crack of light in the darkness” and called on other bodies to follow the EIB’s shining example.

“While the EU and national governments are floundering as the planet burns, the EU’s public bank has made the brave, correct and just proposal to stop funding fossil fuel projects,” said Colin Roche. “We are now urging the European Investment Bank’s board to endorse this step forward, and ensure there are no loopholes for fossil fuel funding.”