The EIB flying in the face of climate breakdown

As our recent report“The ‘EU Climate Bank’ – Greenwashing or a banking revolution?”, demonstrates, the promises to align with the goals of the Paris Agreement and the planned ban on fossil fuels are not the end of the road for the EIB. Indeed, the EIB is still a long way from becoming the “EU Climate bank”.

In the transport sector in particular, a major shift in EIB’s approach needs to take place if the EIB wants to live up to its climate commitments. The bank’s current Transport Policy is largely outdated (dating back to 2011) and enables the financing of polluting and carbon-intensive transport modes and infrastructure projects, including airport expansions.

Since 2016, the bank has provided more than € 4 billion in loans for the expansion of airports. Just in 2019, the EIB financed airport expansions in Greece, Finland, Germany, the Netherlands, Italy, Ireland and Denmark. While the bulk of EIB’s support to the aviation sector is linked to investments in airport infrastructure, the EIB also supports airlines companies, for instance in 2017 through a € 95 million loan to the Dutch company KLM for the renewal of its regional fleet, or a € 250 million loan in Italy for the management of air traffic.

Until recently, aviation has been one of the fastest-growing sources of greenhouse gases (GHG) emissions and the most climate-intensive mode of transport. Globally, aviation emissions have more than doubled in the last 20 years. When including the non-CO₂ climate effects of aircraft, such as NOx emissions, contrails and cirrus cloud formation, the aviation sector is responsible for an estimated 5 to 8% of anthropogenic global warming.

It is also the transport sector whose prospects for energy transition are the most difficult and uncertain. A recent study by the NGO Transport & Environment for instance demonstrates that expected technology and operations improvements will be insufficient to mitigate the fuel demand and emissions growth from aviation. CORSIA, the Carbon Offsetting and Reduction Scheme for International Aviation, is insufficient to tackle aviation’s climate harm, since it ignores non-CO2 effects, relies on questionable offsetting, involves risky biofuels and is mostly voluntary (see our recent blogpost on the illusion of green aviation).

To meaningfully reduce GHG emissions of the aviation sector, there is no other way than reducing traffic. Any investment in aviation infrastructure is therefore in complete opposition to the objectives of the European Green Deal and the EIB commitments to align with the Paris Agreement.

Investments in airport expansions demonstrate the contradictions between the discourses of the EIB and its actual practices. While resistance towards airport expansion is growing worldwide, as illustrated by the recent victory against the third runway at Heathrow, the EIB is still continuing to support such highly polluting projects.

It is quite ironic that, in parallel, the EIB published a ‘Climate Survey’ in January 2020 showing that 36% of Europeans said they already flew less for holidays to help prevent climate change and 75% intended to do so in 2020, but the bank kept disbursing loans in support of the expansion of this industry.

Projects currently under appraisal include the expansion of Terminal 2 of the airport in Nice, France. This plan is heavily opposed by civil society. The project is expected to increase the traffic of passengers by 50%, from 14.5 million in 2019 to 21.6 million in 2030. This would lead to an estimated rise in the amount of commercial flights surpassing more than 20,000 per year. In February 2020, 13 NGOs sent a letter to the EIB outlining reasons why it should not be funding this project. A collective of citizens and association also made an appeal to the Administrative Court in Nice to halt the expansion.

The development plans for the airport in Budapest assume an increase from the current 15 million passengers per year to 21 million in 2030. The construction of a new Terminal 3 is planned, which will be accompanied by the expansion of the existing Terminal 2 and the reconstruction of the runway. Although the airport is located close to settlements, its expansion has not been accompanied by any Environmental Impact Assessment. The affected municipalities and individuals have unsuccessfully attempted legal action to force the competent authorities to take into account the negative environmental and social impacts they are facing such as air pollution, noise, damaged houses, depreciation of properties and increased passengers’ traffic to and from the airport.

Meanwhile, investments have started and a section of the new passenger pier at Terminal 2 has already been built and has since opened to the public in early 2020. The impacted people’s local action group, together with Friends of the Earth Hungary, filed an official complaint to the EIB in March 2020 calling on the bank to withdraw financing until an environmental and social impact assessment is conducted – and includes real public consultations – and the environmental and social impacts are addressed satisfactorily.

Ending all support for aviation and airport infrastructure should be a priority for the EIB since such investments are simply not compatible with its commitment to align with the Paris Agreement.

Given how urgent it is to reduce GHG emissions, far-reaching expectations for future technology improvements in the aviation sector should not guide decisions. The fact is that sustainable flying is and will continue to be an illusion.

The role of a climate bank should not be to feed this dangerous trend, but rather to help develop more environmentally friendly alternatives such as trains (including night trains) and buses, and the electrification of these modes of transport.