The European Union should phase out its funding of oil, gas and coal projects, EU finance ministers said in a joint statement on Friday (8 November), in a move that could mark a major shift in the bloc’s efforts to combat climate change.
It is the first time EU finance ministers have backed a declaration urging an end to fossil fuels funding altogether, having called previously only for an end to funding for coal power plants.
The statement, adopted by EU finance ministers, retains some ambiguity, however, saying it “encourages” multilateral development banks “to phase out financing of fossil fuel projects, in particular those using solid fossil fuels” – a term referring to coal.
And any phase-out, the statement adds, should also take into account the “energy security of partner countries” receiving funding from multilateral donours such as the World Bank and the European Investment Bank (EIB).
An outright phase-out could halt multi-billion-euro financing of fossil fuel projects by the EIB, the EU’s financial arm.
Last year, the EU bank funded nearly €2 billion of fossil fuel projects. Since 2013, such funding has amounted to €13.4 billion, EIB data show.
However, gas projects in Ukraine, Croatia and other EU partners might still be funded after Hungary pushed for a waiver, fearing those countries would otherwise need to rely on Russia, confidential documents seen by Reuters show.
Despite being a top financier of worldwide projects aimed at tackling global warming, the EU is ironically also funding fossil fuels, as many of its 28 member states back gas projects to reduce their reliance on nuclear energy or coal.
Germany is one of the biggest shareholders of the EIB, with a capital share of just over 16% in the Bank. And Berlin has asked for a reformulation of the EU bank’s lending policy to support Germany’s switch from coal to gas as an energy source, EURACTIV German reported last month.
Moreover, Friday’s political declaration needs to be backed up by a formal decision by the EIB board, which is composed by representatives of the 28 EU states.
An EIB decision on stopping fossil fuels funding from beyond next year was expected last month, but was postponed due to divisions within the bloc as some countries, including Germany, Italy and Poland, wanted gas funding to continue.
The EIB board will hold a meeting on November 14 where its policy on fossil fuels is on the agenda, EU officials said.