EIB proposes gas extension to get renewables policy 'across the line'

BRUSSELS — The European Investment Bank has proposed extending its right to approve some gas projects, despite an initial goal of ending support for fossil fuel investments by the end of next year. The proposal is part of an effort to get its new climate-friendly energy policy approved at a crunch board meeting Thursday. It comes in the face of resistance to parts of the policy from some European Union member states, which own the bank, and the European Commission, the EU’s executive arm, largely over concerns about ending all support for gas. EIB funded almost €2 billion of fossil fuel projects last year and €13.4 billion ($14.7 billion) since 2013. The bank’s board of directors, which includes members from each of the 28 EU states and the commission, was originally meant to agree the energy lending policy, or ELP, at a board meeting Oct. 15, but it deferred the decision to this month’s meeting. EIB Vice President Andrew McDowell tweeted last month that he was “confident of securing a final approval in November.” Reuters reported Friday that Germany, Italy, and Poland were among those who wanted gas funding to continue. In a letter dated Nov. 5, obtained by Devex, McDowell wrote to the banks’ board members “setting out the Bank’s understanding of nine changes to the wording of the [energy lending policy] document that could form the basis of an agreement.” The proposed changes include extending the deadline for appraisal and approval of gas projects among so-called “Projects of Common Interest” — a list covering investments deemed worthy of public funding by the European Commission and sometimes jointly funded from the EU budget — by one year to the end of 2021. McDowell wrote: “On the basis of these alterations, which we believe reflect the middle ground of the discussions in recent months, the Management Committee believes that it is time to draw this discussion to a close and get the ELP ‘across the line’ at the November Board meeting.” Xavier Sol, director of Counter Balance, an NGO that follows EIB, noted the proposed modifications would “widen the window of opportunity for more gas projects to be financed before the fossil fuel phase out starts.” “This is problematic in our view, since investment decisions taken in 2021 could mean locking-in gas use beyond 2050,” Sol told Devex, referring to the possible lifespan of these projects. Sol added that language in McDowell’s letter on allowing “rehabilitation and adaptation of the existing gas infrastructure that is needed for the integration of low-carbon gasses and in particular hydrogen” could allow financing for pipelines transporting traditional gas on the “gamble” that it would be used for environmentally-friendly options in the future, Sol said. Asked to address these concerns, an EIB spokesperson told Devex that the bank does not comment on leaked documents, adding that its “ambitious” energy policy proposals are “in line with the EU’s policy of alignment with the Paris Agreement requirements and aim at phasing out financing for fossil fuels.” “It is also no secret that there is a multiplicity of views among the EU member states, which make up the EIB board of directors, on how this objective should be achieved,” the spokesperson added. “This will be the subject of discussion at the EIB board of directors [meeting this] week where we look forward to finding consensus.” The EIB spokesperson drew attention to the conclusions from a meeting of EU finance ministers Friday, which welcomed EIB’s “ambition to increase its contribution to climate action and environmental sustainability.” Ministers also “[encouraged] the multilateral development banks to adopt responsible investment policies and to phase out financing of fossil fuel projects, in particular those using solid fossil fuels, taking into account the sustainable development, and energy needs, including energy security, of partner countries.” Last week, 11 NGOs sent an open letter to European Commission First Vice President Frans Timmermans, denouncing the “negative role” the commission has played in the EIB energy policy debate thus far. “The commission has pushed for a reintroduction of harmful gas projects and postponing the timing of the EIB’s ban on fossil fuel financing,” the NGOs wrote, adding that this undermined the climate change agenda of the incoming 2019-2024 commission, “before the new commission mandate has even begun”. A commission spokesperson said it had “no specific comment to make” on the letter to Timmermans, nor that sent by McDowell, but that “all letters sent to the commission will be replied to”. Instead, the commission spokesperson referred Devex to comments made by commission Vice President Valdis Dombrovskis following Friday’s finance ministers’ meeting. “European Investment Bank … is already making commitments to move away from financing of fossil sources of energy,” Dombrovskis told journalists. “And from the European Commission side, we support this commitment.”