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Pressure Builds on EBRD to Quit Coal Lending
The European Bank for Reconstruction and Development lags behind other major international financial institutions that are moving away from supporting dirty energy projects.
As the European Bank for Reconstruction and Development (EBRD) holds a series of consultations on its draft energy policy this week, pressure is growing on the bank to stop financing new fossil fuel projects, starting with coal.
Despite major international public lenders such as the World Bank (WB) and the European Investment Bank (EIB) announcing tight limitations to their coal financing over the past months, the EBRD appears committed to keep financing the dirtiest of fossil fuels.
During the bank’s public consultation on Wednesday in Belgrade, Serbia, 350.org, SEE Change Net, CEKOR, Fractal and Bankwatch will be delivering to the EBRD a petition signed by 16,725 people asking the bank to stop financing fossil fuels, starting with coal. A similar event took place Monday in Istanbul and another action will take place this Friday in Moscow.
„The EBRD's new Energy Strategy is under the umbrella of the bank's Sustainable Energy Initiative and thus low carbon transition appears to be a central theme of the draft EBRD energy policy,” comments Bankwatch’s EBRD coordinator Fidanka Bacheva-McGrath. „Yet in practice this only translates into a slight reduction in coal investments while the general support to the fossil fuels sector continues as usual.”
Activists are not alone in their calls for the bank to clean up its act. EU Climate Commissioner Connie Hedegaard recently called on the EBRD, EIB, and the World Bank -- which have a combined annual lending pot of €130 billion -- to end support for fossil fuels in their energy lending policy reviews. Of those three banks referred to by the EU Commissioner, the World Bank and the European Investment Bank have already announced virtual withdrawals from coal lending.
Bacheva-McGrath adds: “Although the EBRD has a smaller portfolio than the WB and the EIB, this regional bank is the biggest public lender in its countries of operation, with a significant role to play in either entrenching fossil fuels in the region's energy sector or alternatively leading the major shift to low-carbon economies.”
Between 2006 and 2011, while the current energy policy of the EBRD was in place, the bank’s annual coal lending actually increased from 60 million to 262 million euros, according to Bankwatch calculations. In this period, fossil fuel lending represented 48 percent of the institution’s overall energy lending portfolio.
The importance for the climate cannot be overstated: according to a 2012 report by the Carbon Tracker Institute in London, 80 percent of fossil fuel reserves must remain underground in order to keep global warming below 2°C.
„This year can and must constitute a turning point for global action against climate change,” comments Tim Ratcliffe, European Campaigner for 350.org. „One of the biggest imperatives right now is to put an end to public support for fossil fuels. The WB and the EIB have recently made it clear they want to put an end to dirty coal financing and pull their weight behind the low-carbon transition. If the EBRD does not follow suit with the upcoming energy strategy, it will not only get stuck with a portfolio of stranded assets, but also it will find it impossible to be a driver of change in its regions of operations since many private actors will have already moved faster than the EBRD and onto the low-carbon path.”
(2) EBRD draft energy policy proposed for public discussion this week: http://www.ebrd.com/pages/news/events/energy-policy-belgrade.shtml
(3) Press briefing on energy lending by European public banks (the European Investment Bank and the European Bank for Reconstruction and Development): http://bankwatch.org/sites/default/files/briefing-EnergyLending-22Apr2013.pdf