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November’s update to the bank’s lending criteria means that the EIB will no longer fund fossil fuels that do not include some form of carbon capture. That is because the Luxembourg-based lender has pledged to align its business with the Paris Agreement and up its green investments.
Building support for the EIB’s new tack was a long, drawn-out process and the eventual compromise still prompted objections from certain countries because of the review’s stance on fossil fuels and nuclear power.
An agreement looked in serious doubt late last year after the bank, faced with objections from Germany in particular, postponed a vote on the new policy. But EIB Vice-President Andrew McDowell managed to steer a deal over the line.
“Obviously we’ve made this commitment that by 2025 one half of our lending will be for climate action and the other key environmental objectives set out under the new EU taxonomy,” McDowell explained.
The taxonomy is a new set of criteria that define what is and, more importantly, what is not a green investment. Final approval is still needed on the agreement.
Fifty percent of the EIB’s lending will be taxonomy-proofed by mid-decade but that does not mean the other half will be allowed to undermine those investments.
The updated energy policy also comes with significant financial clout: the EIB announced in November that it would aim to mobilise €1 trillion in green investments over the course of this decade.
In January, the Commission made a similar pledge under its Sustainable Europe Investment Plan (SEIP), where the EU’s executive branch intends to unlock €1 trillion in order to pay for its list of Green Deal policies.