The European Investment Bank (EIB) could withdraw support for new airports, according to a draft climate roadmap seen by EURACTIV. However, the bank is set to keep funding motorways, as well as approving investments under the old rules until 2022.
According to the EIB’s leadership and European Commission President Ursula von der Leyen, the bank should become “the EU’s climate bank” and a new strategy seeks to align the lender’s investment planning with the Paris Agreement by the end of 2020.
That process began last year, when the EIB updated its energy lending policy, which sought to scrub the bank’s loan books of fossil fuel projects. Exemptions remain but the review earned plaudits for redirecting money towards renewable energy and other low-carbon projects.
Half of the bank’s lending will be targeted exclusively towards climate projects by 2025 but the other 50% will need to be “Paris-proofed”, according to the EIB. On 11 November, its directors will consider adopting the new climate plan.
A draft version seen by EURACTIV shows that “support will be withdrawn from airport capacity expansion and conventionally‐fuelled aircraft”. That is a key ask of civil society groups, which penned an open letter to the EIB in June with their wishlist of climate measures.
The bank will instead focus investments on improving the efficiency and environmental footprints of existing hubs. Over the last three years, €4 billion was invested in airports.
In terms of research and development investments, the lender will cease support for technologies like the internal combustion engine and fossil-fuelled propulsion for ships and planes.
But the EIB will not pull the plug on funding motorway expansion. Instead, “an adapted economic test for large projects” will be carried out and aim to exclude roadways that rely on big short-term increases in traffic volumes to turn a profit.
Road transport is the main contributor to the sector’s increasing greenhouse gas emissions and EIB funding of new motorway builds has been heavily criticised by climate activists. A new project in Germany is going ahead despite mass protests at the site.
Between 2016 and 2019 the bank poured more than €10 billion into motorways and is set to continue supporting roadways that are covered by the EU’s TEN-T network, as well as certain corridors outside of the bloc.
“There’s no excuse for the EU’s self-proclaimed climate bank to allow funding for fossil fuels, motorway expansions, and industrial farming,” said Greenpeace EU’s Piotr Wojcik.
According to the draft plan, the EIB will not fund farming activities that “expand into areas of high carbon stocks or high biodiversity value” or any export-focused operations that require air transport to shift goods and livestock.
All projects that have already been submitted for assessment will be considered by the bank regardless of the new criteria until 2022, “due to the lag between initial appraisal and the final presentation”.
The true cost
The climate strategy proposes major changes to how the bank calculates climate impact and will tweak the so-called shadow cost of carbon, which is used to estimate the societal benefits of saving one tonne of emitted CO2.
“The current EIB carbon values are based on studies that pre‐date the Paris Agreement, and in particular does not reflect the [EU’s] net-zero emission target by 2050, or 1.5˚C of global warming,” the draft strategy explains.
It adds that the bank’s calculation metrics will be updated so that the shadow cost is €250 tonnes of carbon by 2030 and that by 2050 the cost will have increased to €800. An annual review will adjust the price, either up or down, accordingly.
Road infrastructure projects, in particular, will be graded against this new metric, the bank insists.
For the energy sector, the bank will rely heavily on its already updated energy policy and the EU’s sustainable finance taxonomy, which will grade what is and what is not considered a sustainable investment.
The draft plan adds that “the electricity sector can be deemed to be on track with a low‐carbon pathway. It follows that all sectors of the economy that rely predominantly on electricity are therefore also aligned, at least where applied in an energy‐efficient context.”
As most public transport is powered by electricity, the bank will assume that mass transit systems are Paris-aligned and, therefore, will remain eligible for funding.
Nuclear power is not mentioned at all in the roadmap. The EIB has reiterated recently that atom-smashing is eligible for support but that under current models new builds are unlikely to make a sufficiently strong business case.
(Edited by Frédéric Simon)