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Open letter: Phase out fossil fuels lending
Diakonia and a broad selection of NGO's have sent an open letter to the Swedish minister for Finance, Anders Borg. We call for the Swedish government to take action for phasing out fossil fuels lending by the European Investment Bank (EIB).
1/4 of lendings goes to the energy sector
As one of shareholders of the European Investment Bank (EIB), Sweden bears responsibility for how the EIB resources are not sufficiently contributing to sustainable development.
In 2010, over EUR 17 billion (24 per cent) of EIB lending was devoted to the energy sector, making it the bank’s second largest lending sector after transport.
Investment on this scale can help countries worldwide to make vital progress on reducing greenhouse-gas emissions at a time when political solutions based on international agreement remain elusive. Unfortunately, the EIB’s lending priorities and energy-investment portfolio are making the problem worse.
The European Investment Bank (EIB) – the EU’s house bank - is the world’s biggest public lending institution. With a lending portfolio of EUR 72 billion (2010) it is bigger even than the World Bank, and was set up in 1958 to support the implementation of EU policies.
Support for fossil fuels is on the rise
In 2007-2010 lending for coal, oil and gas projects made up 33 percent (EUR 16 billion) of the bank's energy portfolio. In the same period renewable energy was supported with over 13 billion EUR. Both lending to renewables and fossil fuels are on the rise. We applaud the fact that in the last years the bank managed to significantly increase its lending to renewables, but it has to be noted that it failed to stop increasing its lending to fossil fuels (compared to 2007 lending for fossil fuels had doubled by 2010).
Continuing support for coal-fired power plants
Although in the energy policy from 2007 the EIB has introduced restrictions for its support for coal projects, this has not prevented the bank from financing this type of energy, e.g. large power plants in Slovenia and Germany1. With at least 40 years of planned lifetime of these installations these investments are in stark contradiction with EU's plans to decarbonise its energy sector by 2050.
Outside of the EU the most heavily supported type of energy were fossil fuels (almost 40 percent). The share of renewables in the overall energy lending outside of the EU was only 19 percent. Hardly any loans went to the least developed countries.
EIB energy policy must be revised
Bearing in mind that much of the energy infrastructure constructed today will be in use even beyond 2050, Swedish and international civil society organizations call upon the Swedish government to make forward-looking decisions now and revise its energy policy in line with climate science as well as with the EU 2050 objectives and Roadmaps.
In particular the undersigned organisations demand the EIB:
immediately ceases support for the most carbon intensive types of energy generation, starting from coal- does not support investments in existing coal facilities, when they result in prolonging their lifetimes or an increase in their production,
develops and implements a plan to phase out lending for other fossil fuels,
stops acquiring equity stakes in companies that are investing in coal or have plants to do so,
continues increasing its renewable energy and energy efficiency lending in Sweden while making sure that its overall investment also continue to increase in less affluent countries of Eastern Europe and those situated outside of the EU,
in its external lending to developing countries only finances projects whose underlying goal is poverty eradication,
ensures access to energy for the project stakeholders, in particular for poor people who currently lack such access. EIB projects should contribute to increased democracy through enhancing public participation in its decision-making process.