Last week’s ten billion euros capital increase for the European Investment Bank (EIB), allowing the bank to lend 60 billion euros extra over the next three years, must come with clear commitments from the bank to stop loans for dirty energy, say NGOs.

The EIB’s shareholders, the 27 EU member states, voted unanimously last week for the capital increase, which is expected to contribute to job creation and boosting economic growth in crisis-hit Europe.

“This increase in the size of money to be lent out by the EIB cannot be allowed to distract from the more crucial dimension of the quality of the projects chosen by Europe’s bank for support,” comments Counter Balance Coordinator Xavier Sol. “In the past, EIB financed projects have not necessarily furthered EU objectives, but in times of crisis and with this capital increase, this cannot be allowed to happen any more.”

The EIB shareholders agreed last week that the additional lending will target four priority sectors: innovation and skills, SMEs, clean energy and modern infrastructure.

However, the strength of the bank’s commitment to clean energy remains a concern for NGOs monitoring the bank, despite significant improvements over the past years.

According to Bankwatch research, between 2007 and 2011, the EIB lent 30% of its energy budget (62 billion euros) for fossil fuel projects, sometimes causing a high carbon “lock-in” effect, for example when financing coal power plants to the value of almost 2 billion euros over these five years (1). In 2012, despite decreasing, fossil fuel lending still constituted 2.55 billion euros, or 20 percent of the bank’s energy lending (2).

“Our research into the EIB energy sector shows that the EU policy objective of decarbonising the energy sector is still not well reflected by the bank’s energy lending,” comments Bankwatch’s EIB coordinator Anna Roggenbuck. “This year, as the bank is reviewing its energy lending policy, this must be remedied. If the EIB is serious about its climate commitments, it must announce, by the end of this year, that it is putting an end to lending to coal and other fossil fuels.” (3)

Furthermore, Bankwatch and Counter Balance encourage the EIB to increase the current target of dedicating 30 percent of the bank’s lending dedicated especially to Climate Action. (4) Additionally, the bank must ensure that the percentage of loans not specifically dedicated to Climate Action does not contradict climate concerns, as it is occasionally the case with current projects of the bank.

Notes for the editors:

[1] Bankwatch analysis of EIB energy lending 2007-2011
[2] Bankwatch analysis of EIB energy lending for 2012
[3] The European Investment Bank is currently reviewing the policy guiding its energy lending. You can read about the process here.

The current policy, which guided loans in the period 2007-2011, allows for support of coal and other fossil fuel projects. In public submissions to the consultation process for the new policy, Bankwatch and Counter Balance demanded of the EIB to put an end to fossil fuel lending. You can read the submissions of the two NGOs here: Counter Balance & Bankwatch

[4] Climate Action is the EIB lending to renewable energy, energy efficiency, sustainable transport, innovation and climate change adaptation. Read more about the EIB’s Climate Action programme. Counter Balance, which focuses on EIB non-EU loans among others, argues that the EIB’s lending outside of the EU should be limited to the EU neighboring region, given the bank’s poor climate track record when it comes to loans outside of the EU.