The European Investment Bank (EIB) agreed late last night to phase out financing for fossil fuel energy projects by the end of 2021.
The historic decision makes the EIB the world's first multilateral development bank to commit to stop lending to all fossil fuels projects having already phased out coal financing in 2013.
It also announced ‚Ǩ1trn (£0.86trn) of investment for climate action and sustainable development over the next decade, accelerating finance for clean energy innovation and efficiency.
EIB president, Werner Hoyer, said the bank had made a “quantum leap“ in its ambitions for protecting the environment, describing the climate as “the top issue on the political agenda“.
This comes after several member states, including Germany, opposed initial proposals to end financing for fossil fuels, but a compromise deal has now been reached.
“We will stop financing fossil fuels and launch the most ambitious climate investment strategy of any public financial institution anywhere,“ Hoyer said.
The EIB is the world's largest multilateral development bank, and its latest announcement sends a signal to markets worldwide about the risk of investment in fossil fuels.
The decision comes after months of internal debate, with the European Commission previously introducing loopholes to proposals put forward in July to end fossil fuel financing.
The bank said it would also increase the share of its financing dedicated to climate action and sustainable development to 50% by 2025, and ensure its activities are aligned with the Paris Agreement by the end of 2020.
Environmental organisation E3G described the new lending policy as a commitment by incoming European Commission president Ursula von der Leyen to make the EIB a climate bank.
Europe is sending a clear signal that it intends to move away from risky fossil fuel investments, toward the climate-neutral future that its citizens want, E3G chief executive, Nick Mabey, said.
This is an important achievement. The EIB is sending a message to other financial institutions that investment in fossil fuels is drawing to an end.“
Image credit: Shutterstock
