The EU's public financing arm, the European Investment Bank (EIB), has joined the World Bank in pledging to limit funding for new coal-fired power plants.
The bank says it wants to help the European Union reduce pollution and meet ongoing climate reduction targets.
But like the World Bank, the EIB board of directors stopped short of turning its back on coal entirely, leaving several loopholes.
It will still consider loans to new or refurbished coal plants that emit less than 550 grams of carbon dioxide per kilowatt-hour. This could be accomplished if coal plants co-fire with biomass or add either combined heat and power (CHP) or carbon capture and storage technologies.
(Photo credit: Mauri Rautkari, WWF-Canon)
And the board also added two exemption clauses that will allow it to approve projects that contribute to Europe's "security of supply" or that would contribute to poverty alleviation or economic development in other regions.
"Adoption of the new lending criteria represents an important step forward in the European Investment Bank's commitment to energy investment that supports EU policy and reflects the urgent investment challenges currently facing the energy sector," says Mihai Tanasescu, the EIB vice president responsible for energy lending.
All this will be reconsidered in fall 2014, with an eye toward whether the EU's climate targets or emerging technologies justify adopting an even lower emissions threshold, EIB press officer Richard Willis told RenewableEnergyWorld.
“When considering at what level to set the EPS we looked at the nature of emissions across a range of technologies," says Willis. "We’ve set a standard unanimously agreed by all Member States which fully reflects current policy, but the guidelines haven’t been issued yet because we were asked that we would review and also tighten the limited exceptions that are in place to make sure we focus primarily on renewables, grids and energy efficiency."
Approximately 90% of EIB's future investments will focus on renewables, energy efficiency and grid networks, says Willis.
Given that EIB puts an estimated $14.5 billion into energy projects every year, its decision should have a huge impact and has been greeted with cautious optimism by environmental organizations including the World Wildlife Fund (WWF).
“The move by the EIB is very welcome but more needs to be done,” says Sebastien Godinot, economist at WWF’s European Policy Office. “To have a serious chance at staying within the 2 degree Celsius 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.”
Ex-IM Bank Denies Vietnam Project
The U.S. Export-Import Bank, known for its penchant for financing fossil fuels, also finally took a stand against coal, following Obama's climate change speech, where he vowed the federal government would halt support.
It announced it would stop its potential financing for two coal power plants in Vietnam.
"By denying taxpayer backed financing for this dirty coal project, the Export-Import Bank put the Action in the President's Climate Action Plan. We applaud their courageous decision," Doug Norlen, policy director of Pacific Environment told Bloomberg.
Ex-Im lent a record $9.6 billion to fossil-fuel projects in countries such as India and South Africa during the 2012 fiscal year, almost double the 2011 total, says Pacific Environment.