The European Union’s investment arm risks torpedoing the bloc’s commitment to abide by the Paris climate goals by financing billions of euros worth of new natural gas infrastructure projects, new analysis said Thursday (13 June).
The European Investment Bank, the world’s largest multilateral lender, provided €2.5 billion for fossil fuel projects in 2018, the bulk of which went towards gas pipelines.
Even as scientists warn that reliance on fossil fuels must be slashed in order to drag greenhouse gas emissions down, the EIB spent €14.23 billion on fossil gas projects between 2013 and 2018.
This compares to no direct finance for coal and €310 million for oil projects in the same period, according to industry watchdog Oil Change International.
An EIB source told AFP the bank was currently reviewing its energy lending policy.
“It must take account of the views and needs of energy stakeholders across the spectrum – from national authorities to academia, civil society, and industry,” said the source.
Although less polluting than coal, natural gas still produces planet-warming carbon dioxide when burned.
Its extraction process also leaks methane – a gas dozens of times more potent than CO2 in the short term.
Industry sees gas as a transition fuel that can satisfy growing energy demand as renewables struggle to keep up. In the long-run, it says decarbonised gases such as hydrogen as well as storage infrastructure will ensure a central role for the gas sector in a low-carbon economy.
The report analysed the EIB’s spending on gas projects, and concluded that the bank needed to urgently divert funding from fossil fuels to renewables or risk ripping apart the EU’s climate promises.
“The EIB and its member state shareholders are coming up with creative excuses to keep calling gas a bridge fuel,” said Bronwen Tucker, an analyst who co-wrote Thursday’s report.
“But the science is crystal clear that we need to leave all fossil fuels in the ground and get on with a just transition to 100% renewable energy.”
The 2015 Paris deal saw nations commit to limit global temperature rises to “well below” two degrees Celsius and to a 1.5C cap if possible.
The United Nation’s Intergovernmental Panel on Climate Change (IPCC) says the safest way to hit the 1.5C target would involve a rapid and deep drawdown in fossil fuel emissions.
The IPCC’s latest assessment said natural gas use in energy production must drop a quarter by 2030 and nearly three quarters by 2050 for the world to safely stay within 1.5C of warming.
But according to the International Energy Agency, gas consumption rose 4.6% in 2018 alone, accounting for nearly half of the global increase in energy demand.
Last re-defined in 2013, the EIB’s Energy Lending Policy specified a continued and “critical” role for it to invest in “gas networks and indigenous hydrocarbon production and refining”.
Thursday’s report said that in order to stick to the Paris goals, lenders had an obligation to ensure investments “are not contributing to further carbon lock-in.”
Gas majors also argue that existing or upcoming pipelines could be converted to carry lower- or zero-carbon fuels, such as hydrogen gas, at some point in the future.
But critics of gas projects argue infrastructure such as pipelines, terminals and storage facilities essentially commit countries to continue using the fuel for decades to come – an approach deeply at odds with the IPCC’s climate outlook.
Oil Change analysed the EU’s priority gas projects contained in the bloc’s list of Projects of Common Interest and found that 72% of them were “inextricably” linked to fossil gas.
“It’s kind of a fairytale that the gas industry is spinning that it’s going to be simple to transition this existing infrastructure to these new forms of energy,” Alex Doukas, report co-author, told AFP.