The European Investment Bank (EIB) has announced a new lending policy designed to accelerate investment and innovation in clean energy and energy efficiency.

The EIB says that it will cease the financing of fossil fuel projects from the end of 2021 and will also increase its support for energy efficiency and low carbon initiatives.

The move will unlock €1 trillion of climate action and environmental sustainable investment in the decade to 2030, and will align the EIB’s financing activities with the goals of the Paris Climate Agreement from the end of 2020.

The bank said that the strategy marked a “quantum leap” in its climate ambitions. “Climate is the top issue on the political agenda of our time,” said EIB president Werner Hoyer. “We will stop financing fossil fuels and we will launch the most ambitious climate investment strategy of any public financial institution anywhere.”

The EIB’s new strategy also includes increasing financing for decentralised energy production, innovative storage and e-mobility. It will also support the grid investment needed for intermittent energy sources like wind and solar as well as strengthening cross-border interconnections.

Overall, it is aiming to support €1 trillion of investments in climate action and environmental sustainability in the critical decade from 2021 to 2030. It will also gradually increase the share of its financing dedicated to climate action and environmental sustainability to reach 50 per cent of its operations in 2025.

Andrew McDowell, EIB vice-president in charge of energy said: “Carbon emissions from the global energy industry reached a new record high in 2018. We must act urgently to counter this trend.”

Over the last five years the European Investment Bank has provided more than €65 billion of financing for renewable energy, energy efficiency, and energy distribution.