Coal blow as major European bank cuts funding
Last updated on 11 December 2013, 3:01 pm
EBRD joins World Bank and European Investment Bank in slashing funding for coal
The European Bank for Reconstruction and Development (EBRD) has approved a five-year strategy to limit financing coal projects and increase investment in clean technology and energy efficiency.
The multilateral development bank will limit financing coal fired power generation projects to “rare and exceptional circumstances in which there is no feasible alternative energy source.”
“We cannot use carbon without having a thought about what the impact of climate change is going to be,” EBRD managing director for energy and natural resources, Riccardo Puliti told Bloomberg. “There is a climate-change problem, and there are actions to be undertaken in order to solve it.”
Since 2006 the bank has invested $8.6 billion in energy and power projects, of which $2.75 billion has been directed to renewables and $717m towards coal.
The EBRD joins other financial institutions like the World Bank and the European Investment Bank and the US, UK and Norway in cutting spending on coal plants, which collectively are the largest single source of greenhouse gas emissions.
Campaign groups like WWF welcomed EBRD’s strategy saying the time is ripe for other public financial institutions, in particular multilateral development banks, to follow suit immediately and shape the world’s shift to energy savings and sustainable energy.
“The move by the EBRD is positive, but to have a serious chance of keeping global warming below 2°C, the EBRD needs to strengthen its standards and eventually phase out its support for all power supply based on fossil fuels,” Sebastien Godinot, an economist at WWF’s European Policy Office said.
In the past the bank has stressed coal is a small part of its overall funding strategy.
“It is actually a small part (about seven projects over the last seven years) of our activities in this sector and for most of our countries of operation it simply isn’t an issue,” a spokesperson told RTCC recently.
“By comparison we financed around 57 renewable energy projects in the same period for a value of approximately €2 billion and renewable financing is by far the fastest growing segment of our activity in the power sector.
We have also done a lot of less glamorous work in areas such as smart grids and energy efficiency more generally. This doesn’t get the headlines in the same way but there are huge opportunities here to improve efficiency and this is really our bread and butter work.”
EBRD’s first test will come in the form of a new 600MW lignite plant project in Kosovo which the bank may be asked to co-finance.
“In the coming months, we will be closely monitoring how the EBRD is implementing its new ‘anti-coal policy’ and if the Bank actually walks the talk,” Godinot added.
“The Bank must stand firm on its ‘anti-coal policy’ and support clean alternatives for Kosovo and elsewhere.”
VIDEO: Heffa Schücking, CEE Bankwatch Network on the role banks play in financing coal production.