by Alexandra Patel
By 2021, the European Investment Bank has stated that it will no longer offer loans to fossil fuel companies. As part of a strategy to better use its money to fight climate change, the bank will also increase its investments in clean energy.
Cracking Down: This new policy came at an important moment just record-breaking heatwaves hit cities throughout Europe and sparked wildfires across the Arctic circle due to the unprecedented heat. As a consequence of global warming, the Luxembourg-based EIB is targeting coal, oil, and natural gas companies as the 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 EIB stated last Friday.
Better Money: In a bid to unlock 1 trillion euros of investment over the coming decade, incoming president of the European Commission Ursula von der Leyen vowed to turn parts of the European Investment Bank into a “Climate Bank”. Just last year, climate-action projects financed by EIB amounted to 16.2 billion euros – that is 30% of its lending capabilities.
Why This Matters: This transition highlights the European Union’s concerted effort to cap the global rise in temperatures at 1.5 degrees Celsius above 1990 levels–as laid out by the terms of the Paris Climate Agreement. As the US increasingly exits the global effort to fight climate change, the EU has stepped up to show how the rest of the world might orient their institutions to align with broad climate goals.