European Investment Bank postpones decision on fossil fuel lending

BRUSSELS (Reuters) - The European Investment Bank has postponed taking a decision on whether to stop financing fossil fuel projects to November, an official said on Tuesday, as the multilateral lender works out whether to keep financing gas projects for a period.

FILE PHOTO: Smoke and steam billows from Belchatow Power Station, Europe's largest coal-fired power plant operated by PGE Group, at night near Belchatow, Poland December 5, 2018. REUTERS/Kacper Pempel/File Photo

The bank’s president, Werner Hoyer, is pushing for the bank to take the lead in financing sustainable projects, and proposed in July to stop its fossil fuel lending by the end of 2020.

But Germany, Europe’s biggest economy and the EIB’s biggest shareholder, wants the bank to continue financing projects linked to natural gas, which produces less greenhouse gas emissions than coal or oil and which Germany and some other states want to use as a fuel to transition away from coal.

“On the basis of what we discussed this morning I am increasingly confident that we will achieve final approval in November,” said Andrew McDowell, an EIB vice-president, told Reuters in an interview during the meeting.

The EIB’s board, made up mostly of European Union finance ministers, has been discussing ways to make the bank greener by ending financing for fossil fuel-powered energy projects, but some countries heavily dependent on coal or gas have opposed the total ban of fossil fuel lending.

Germany, Italy, Poland and Latvia want the bank to keep funding certain gas projects to help the transition from coal or nuclear power, or for energy security reasons.

McDowell said the delay would “allow some more national reflection” after some countries asked for clarification on the proposal from EIB to completely stop funding fossil fuel-linked projects from the end of next year.

EIB figures show it funded almost 2 billion euros ($2.10 billion) of fossil fuel projects last year, drawing ire from Green lawmakers and environmental groups.

“The possibility of transforming the European Investment Bank into a climate bank is vanishing,” said Alex Doukas, lead analyst at think tank Oil Change International, joining other environmental groups such as WWF urging member states to support the EIB proposal at the upcoming Nov. 14 board meeting.

(This story corrects in paragraph six to remove Spain from countries opposing the proposal. Spain supports it, a government official said)

Reporting by Jonas Ekblom; Editing by Louise Heavens and Edmund Blair