Germany to sit out decisive EIB vote amid fossil fuel row

German Chancellor Angela Merkel speaks during the Day of the Employers conference in Berlin, Germany, 12 November 2019. [Photo: EPA-EFE/CLEMENS BILAN]

Germany is preparing to abstain from a vote on the European Investment Bank’s (EIB) future energy lending policy on Thursday (14 November). Internal government disputes continue to scuttle attempts to form a common position on scrapping fossil fuel funding.

The Bundesrepublik’s finance, environment and justice ministries are in favour of a proposed update that would scrub the EIB’s loan books of fossil fuel projects by the end of next year, as part of the EU lender’s metamorphosis into a climate bank.

But the government has come up short in brokering a common position among its various ministries, meaning Germany is likely to abstain from a vote on the new policy scheduled for tomorrow, according to sources familiar with the matter.

Germany’s energy ministry is likely to be the main obstacle, given its opposition to the EIB’s proposal to end funding for natural gas projects.

Will Germany block EIB plans to ditch natural gas?

The European Investment Bank wants to purge its loan books of fossil fuels, including natural gas, by 2020. Although the Bank’s final decision is expected to be delivered on 15 October, resistance, especially from Germany, is brewing. EURACTIV Germany reports.

Berlin’s reluctance comes despite a last-minute attempt by the EIB to make room for low-carbon gases like biomethane and hydrogen, as well as an extension to the 2020 cut-off point for projects that have already secured the European Commission’s blessing.

That is because Germany’s domestic plans to ditch coal and pick up the slack left by the nuclear power phase-out rely heavily on natural gas. The energy ministry is reportedly worried that a vote in favour of the EIB’s strategy would undermine its own planning.

The finance ministry has also struggled internally on which side of the argument to support before reportedly backing the EU lender’s position, according to documents obtained by Greenpeace’s Unearthed investigative journalism project, seen by EURACTIV.

State Secretary Sarah Ryglewski (Social Democratic Party) told a finance committee in September that gas needs to remain a part of the EU’s energy mix to ensure security of supply for the next two decades.

The finance ministry official added that a proper assessment would be needed on how to reconcile scrapping fossil fuel funding with the EU’s current energy policy objectives.

That position was also mirrored by the European Commission, which previously pushed back against the EIB’s rigid cut-off deadline. Projects of Common Interest (PCI) related to gas will now remain eligible for support until 2021 under a compromise offered by bank vice-president Andrew McDowell.

‘We need this dinosaur’: EU lifts veil on gas decarbonisation strategy

As the new European Commission of Ursula von der Leyen prepares to take office, one of its key priorities will be to deliver on a new market design for gas that will have EU decarbonisation objectives at its core. And natural gas of fossil origin will play a significant part, officials say.

Decision time

Berlin’s decision to sit out Thursday’s ballot does not mean the fight is won for the likes of France, the Netherlands and the UK though, all of whom support the bank’s fossil-free position. Under EIB procedure, an abstention is akin to opposition.

Germany owns 16% of the bank’s shares, which means its vote carries the most weight along with France, Italy and the UK, who own the same amount of shares.

Despite unanimous backing from finance ministers last Friday on a statement that urged banks to phase out fossil funding, the result is still uncertain. Question marks still hang over Italy, much of Central and Eastern Europe, as well as Spain and its new minority government.

Worried by climate change, EU moves to end fossil fuel funding

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.

The vote itself is unusual as the bank’s policy is always to make decision on consensus. But given the difficulties and delays, a double-majority vote is now scheduled. 

However, an EIB official told Luxembourg news outlet Delano that the deliberations could run over and resume at the bank’s next board meeting on 12 December. A bank spokesperson told EURACTIV in September that the issue could even stick around until 2020.

Germany’s abstention preparation could indeed prompt the EIB to kick the can down the road once more. That would complicate other issues such as Council talks on a climate strategy for 2050, which should top the agenda of the next summit, also scheduled for 12 December.

Environmental legal group ClientEarth said in a statement that “Germany should be upholding the progressive climate measures on the table, not holding them back” and that “from the late coal phase-out date to this latest attempt to keep public money going to fossil fuels, its green image is falling apart at the seams.”

The group has also warned that continued support for gas power would breach the EIB’s legal duties, citing the EU’s obligations under the Paris Agreement on climate change.

[Edited by Frédéric Simon. Florence Schulz contributed reporting to this article].

EU bank tees up fossil fuel compromise ahead of crucial vote

The European Investment Bank will decide on Thursday (14 November) whether or not to purge its loan books of fossil fuel projects. All signs point to the EU lender striking a compromise with Germany and Italy which want more leeway for new gas projects.

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