The upcoming review of the European Investment Bank (EIB) transport policy provides an opportunity to reprioritize public spending away from high-carbon and polluting projects, in favor of more sustainable transport modes such as trains, public transport and cycling. A new analysis published today by the NGO Counter Balance outlines the current state of play of EIB transport investments and proposes a real change of course.
The European Investment Bank (EIB) is the largest multilateral lender in the world, and also the financial arm of the European Union. The transport sector is a major area for EIB investments, but has until now been far from climate friendly. From 2016 to 2020, the EIB has invested more than €4 billion in loans for the expansion of airports, €12,6 billion for roads, highways and motorways and almost €3 billion in polluting investments for the maritime sector.
Doubts remain about the capacity to properly screen out carbon-intensive projects
This is quite paradoxical at a time when the EIB is transforming itself into the “EU Climate Bank” and has been tasked to play a pivotal role in the European Green Deal and EU recovery plans.
In November 2020, the EIB approved a Climate Roadmap aiming at aligning all its operations with the 1.5°C objective of the Paris Agreement. A welcome step was taken with an announced ban on airport capacity expansion, with the Bank rightfully identifying such investments as being non-Paris Aligned.
Still, the Roadmap falls short of ensuring that the EIB transport portfolio will become more sustainable. There was for instance resistance at the Bank to stop funding highways and motorways expansions. Instead, the EIB proposed a new carbon pricing and economic test as a way of excluding some of the most polluting road projects. However, doubts remain about the capacity of these tools to properly screen out carbon-intensive projects. Experiences in the energy sector are far from reassuring, since the EIB already presented climaticide gas projects as providing positive climate impacts despite undergoing supposedly stringent carbon emissions assessments.
The EIB’s approach to the transport sector still needs to undergo radical change if it is to contribute to the transition towards a decarbonised future.
But after years of delay, an opportunity to tackle this issue is finally coming up: the EIB will revise in 2021 its Transport Policy, a largely outdated document dating back from 2011 and which leaves the door opened for the EIB to finance carbon-intensive transport modes.
A central demand for civil society organizations is for the EIB to end the financing of capacity increase for motorways and highways, as such investments are clearly incompatible with the Bank’s climate commitments.
Despite its self-proclaimed climate leadership, the EIB signed for example last August a loan for the expansion of the A49 motorway in Germany, a controversial project heavily contested by civil society. The construction of the motorway will result in the destruction of 27 hectares of the Dannenröder forest, located in a nature protection area with trees that are more than 200 years-old.
Continuing to clear out ever more of our natural resources to build new high-carbon infrastructures is irresponsible at a time when all our efforts should be focused on tackling the climate emergency and biodiversity crisis.
Another problematic part of the EIB’s transport portfolio is its support for port expansions and LNG fueled vessels. Often omitted as a polluting transport sector, shipping accounts for more than 2% of global emissions and is one of the sectors where decarbonization is the hardest to achieve. It is difficult to see how a continuous increase of shipping traffic and transport of international goods can be compatible with the EIB’s climate goals. This is for instance the case of the EIB loan to the Port of Piraeus, Greece’s largest port and main platform in Europe for China’s maritime ambitions as part of the Belt and Road Initiative.
It is crucial for the EIB to recognize, as it did for the aviation sector, that the endless growth of road and maritime transport is unsustainable and only locks us in a high-carbon era. Considering the huge efforts needed to decarbonize European mobility, public finance should instead be aimed at scaling up support for low carbon transport modes and infrastructures, including public transport, bike lanes and rail electrification.
But for this to happen, the EIB needs to take action and swiftly adopt an ambitious Transport Policy that prioritises climate-proof and transformative projects. There is no more time to lose, as investment decisions taken these days will shape the future of our economies and territories for the decades to come.