The EU’s project loan arm, the European Investment Bank, has undertaken to end its multibillion euro financing of fossil fuel projects by the end of 2020 in order to align its strategy with climate targets, reports the Guardian newspaper.
The EIB has drafted a report including plans that propose cutting support for energy infrastructure projects which rely on oil, gas or coal by barring companies from applying for loans beyond the end of 2020.
The EIB says it intends to align itself with the Paris Agreement which aims to cap global heating at 1.5C above 1990 levels by cutting greenhouse gas emissions.
‘This transition will be profound. Solidarity is required to ensure that potentially vulnerable groups or regions are supported’ the report says.
EIB intends to set up an energy transitions fund to support projects which help EU member states to transition to a cleaner economy. In the past the EIB has funded fossil fuel projects including the Trans Adriatic gas pipeline and oil storage facilities in Cyprus.
The crackdown on fossil fuel lending comes amid growing pressure on financial institutions to cut their exposure to high-carbon projects.
Last month 80 civil society organisations and academics published an open letter to the EIB calling on the bank to end its fossil fuel financing, which topped €2.4bn (£2.1bn) in 2018.
Alex Doukas, from environmental campaigner Oil Change International, said: “The EIB’s proposal to end financing for fossil fuels by 2020 is a massive step forward in climate leadership. With this move, the world’s largest multilateral lender is now poised to leave oil, gas and coal in the past.
“The EU member states who control the bank must now stand behind the EIB’s ambitious climate vision, and other financial institutions should quickly follow suit to stop funding fossils,” he said.