The European Investment Bank (EIB) announced today an energy policy that while introducing stringent criteria for financing coal power plants does not eliminate the possibility of support for coal or other fossil fuel energy sources.

The bank’s new energy policy will introduce Emission Performance Standards for all fossil fuel generation projects to screen out investments whose carbon emissions exceed a certain threshold. While not specified today by the EIB, the EPS level included in a 25 June draft of the policy was set at 550 gCO2/kWh (see below a table explaining what types of fossil fuel projects are excluded by various EPS levels).

“The EPS level proposed by the EIB in June (550) does not guarantee the elimination of all high carbon lending. We need at least a 350 EPS level in order to say that the policy document is serious about addressing climate change,” said Bankwatch EIB coordinator Anna Roggenbuck. “We therefore expect that the EIB review its proposed EPS soon after the discussion on 2030 climate targets is completed within EU.”

One of the most concerning aspects of the EIB draft was the “EPS exception” set out in the document for cases in which “a plant contributes to the security of supply” within the EU or when “it contributes to poverty alleviation and economic development” outside of the EU

According to the EIB announcement today, the Board of Directors approving the policy has asked for additional clarifications on proposed exemptions to the Emissions Performance Standard.

“It is important to have clarification on these exemptions, because these can open the gates for any dirty coal project to receive financing as long as its proponents are able to convince that the loan is essential for energy security,” says Bankwatch energy campaigner Kuba Gogolewski. “How this issue will be clarified over the next period will say a lot about whether the EIB and EU Member States are indeed committed to the transition to low-carbon economies. While we see promising signs in today’s policy, much more is needed.”

Counter Balance coordinator Berber Verpoest says, “Despite the introduction of stronger emissions standards, the EIB keeps the door open to all fossil fuels including the possible financing of shale gas and also makes it easier to lend to large dams with negative social and environmental effects. More can and should be expected from a self-declared climate champion.

Yesterday’s vote by the EIB – together with the World Bank guidelines for energy lending approved last week – is an important signal for the European Bank for Reconstruction and Development (EBRD) to modify its own energy policy in order to end its support for coal mining and coal installations.

On Thursday 25 July, the EBRD will present a draft of its future energy policy. Bankwatch and Counter Balance say that the draft document (already published) does too little to reduce climate-damaging financing and needs to be significantly improved by introducing emission reduction targets for the banks’ energy lending and setting concrete timelines and objectives for the bank’s renewables and energy efficiency support."