EU’s lending arm to phase out funding of fossil fuels

BRUSSELS - The European Investment Bank plans to stop funding fossil fuels starting in 2021 as Europe steps up the fight against climate change, according to a draft of the EIB’s new energy strategy.

The Luxembourg-based EIB, the European Union’s lending arm, aims to increase support for clean-energy projects as the EU crafts stronger policies to counter the more frequent heat waves, storms and floods tied to global warming, says the draft document seen by Bloomberg and due to be published later on Friday. EIB believes that fossil fuels such as coal, oil and natural gas are leading contributors to climate change.

“The bank will phase out support to energy projects reliant on fossil fuels: oil and gas production, infrastructure primarily dedicated to natural gas, power generation or heat based on fossil fuels,” the document says. “These types of projects will not be presented for approval to the EIB board beyond the end of 2020.” The bank’s board is due to discuss the plan in September.

The EIB, which has invested in the energy industry for the past six decades, is gearing up to play a bigger role in spurring low-carbon technologies because the EU is pushing to enact the landmark 2015 United Nations agreement to fight global warming after the U.S. last year turned its back on the accord.

Ursula von der Leyen, the incoming president of the European Commission, the 28-nation EU’s executive arm, vowed last week to turn parts of the EIB into a “Climate Bank” in a bid to unlock 1 trillion euros ($1.1 trillion) of investment over the coming decade.

The EIB’s financing of climate-action projects amounted to 16.2 billion euros last year, or 30% of its lending, according to the bank.