The European Investment Bank (EIB) announced it will stop funding fossil fuel projects after 2021 to become the world’s first “climate bank”. Directors of the EIB are taking a significant step towards addressing the issue of climate change through a new energy lending policy, contributing to delivering on the Paris Climate Agreement. Given the EIB’s status as the world’s largest multilateral financial institution, the decision could set precedent for other lending institutions to implement similar strategies and policies.
The commitment requires energy projects applying for EIB funding to demonstrate that they can produce a one-kilowatt hour of energy while emitting less than 250 grams of carbon dioxide. In addition to cutting down funding for fossil fuel projects, the bank’s directors approved a new strategy for environmental sustainability, including supporting €1 trillion in climate action between 2021 and 2030 and basing its financing on the principles established in the Paris Climate Agreements by the end of 2020. Green groups have widely praised the EIB’s ambitious climate investment strategy, although the announcement comes a year later than hoped, with loopholes that could let certain gas projects “of common interest” through.
