EIB ditches fossil fuel investments

In a recent draft of an energy industry proposed lending policy, the European Investment Bank (EIB) laid out a plan to take steps toward the achievement of the environmental sustainability goals set in the Paris Climate Accord. This creates conflict with their previous investments in the non-renewable fossil fuel industry.

To siphon money into the pursuit of sustainable energy, funds must be taken out of previously sponsored unsustainable projects. Therefore, the EIB intends to stop support and investments in fossil fuel based projects. The EIB states in the draft that proposals for new non-renewable energy projects from 2020 onward will not be considered or presented for approval, beginning the subsequent phasing out of investments in the industry. Despite acknowledging the necessity of natural gas and fossil fuel power generation that will remain necessary throughout the next decade at least, the EIB is slowly shifting its focus toward longer-term solutions in its effort to live up to the Paris Agreement.

Investments into new energy infrastructure and renewable energy sources are predicted by the EIB to have subsequent positive effects on the global competitiveness of Europe’s energy industry, as the businesses and consumers alike are beginning to make the shift toward more sustainable consumption behaviours.

Though the current cost of the infrastructure necessary to extract renewable energy exceeds that of the cultivation of non-renewable fossil fuels in the short-term, the EIB predicts that investments in innovative low-carbon technology will significantly reduce these costs in the long-term. The drafted investment plans of the EIB were specifically focused on four goals:

1. Unlocking energy efficiency: To increase efficiency in the industry, the EIB intends to establish a new European Initiative for Building Renovation which they hope will help finance the renovation of older residential buildings, whose energy consumption practices are outdated and potentially wasteful. While this proposal may cause high overhead costs in the short-term, the EIB believes that the lower consumer costs of energy from renewable sources will pay off in the long-term.
2. Decarbonising energy supply: To reduce carbon emissions, the EIB aims to double the renewable power generation capacity of the EU by investing in renewable electricity projects with the cooperation of regional firms, and to invest in an increase in a sustainable supply of necessary raw materials, to aid in the completion of these projects.
3. Supporting innovative technologies and new types of energy infrastructure: The EIB plans to invest in the purchase and development of new and innovative low-carbon technology, to meet the Paris Agreement’s long term goals and to maintain or even increase the global competitiveness of Europe’s energy industry.
4. Securing the enabling infrastructure: This will be achieved through funding the development of new types of energy infrastructure, especially through investments in power markets (such as improving industrial battery storage).

The EIB recognises the dominance of the fossil fuel industry in the energy production market, referencing it multiple times throughout the policy draft. They refer to the reliance of many EU and non-EU communities on the fossil fuel industry for their access to energy as well as for reliable employment and investment into working communities. For these reasons, they intend to make large investments into renewable energy industries, in order to decrease these community’s reliance on fossil fuel, and create access to more sustainable sources of energy and new skilled jobs in a developing market sector.

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