The world´s largest public financial institution, the European Investment Bank (EIB), has committed to phasing out the funding for coal power plants.
Following a 10-month review, the EIB confirmed yesterday that it would introduce a new Emissions Performance Standard to be applied to all fossil fuel generation projects “to screen out investments whose carbon emissions exceed a threshold level.”
In a statement, the EIB said: “Gas is expected to remain a transition fuel to a low carbon energy system, and the Emissions Performance Standard will ensure that lending is restricted to projects that make a positive contribution to EU economic growth and are consistent with EU climate policy.”
Under the standard, new fossil-fuelled power plants would be able to emit 550 grams of carbon dioxide per kilowatt hour (gCO2/KWh).
This effectively rules out the funding of conventional coal combustion, which can result in the emission of 1000gCO2/KWh, although some plants could continue to burn coal if they mix it with biomass.
The EIB claims that, during the past five years, its lending to power generation projects using fossil fuels has declined significantly with lending to coal and lignite power stations “representing less than 1.5% of overall energy lending”.
In addition, the EIB, which lends €12 billion a year to the energy sector, has adopted new guidelines to reinforce support for investment in renewable energy, energy efficiency and energy grids.
The EIB expects these sectors are to require the most significant investment in the coming years.
Günther Oettinger, European Commissioner for Energy said: “Significant long-term investment across Europe is essential to achieve our energy and climate targets and maintain a technological lead.
“The European Investment Bank plays a valuable role in financing public and private sector investment in energy infrastructure and supporting projects that contribute to achieving EU energy policy goals. The new guidelines provide a framework for continuing this contribution over the years ahead.”
WWF said it “cautiously welcomed” the move, which follows the World Bank´s decision last week to limit funding for coal power plants to “only rare circumstances”.
Sebastien Godinot, economist at WWF´s European Policy Office, said: “The move by the EIB is very welcome but more needs to be done. To have a serious chance at staying within the 2°C climate change limit in Europe by 2050, the EIB should strengthen its standards and eventually phase out its support for all power supply based on fossil fuels.”
Source: Utility Week