EBRD energy lending report: conflicting investments end up contradicting climate science

May 17, 2012

London – Almost half of the 6.7 billion euros lent by the European Bank for Reconstruction and Development (EBRD) between 2006-2011 goes to support for fossil fuels, according to a report issued today by CEE Bankwatch Network. Support for coal, oil and gas must be discontinued altogether, argues Bankwatch, if the bank’s commendable efforts on increasing financing for renewables and energy efficiency are to have a positive impact in the global fight against climate change.

48 percent of the EBRD’s energy lending over the past six years has gone to fossil fuels, shows the Bankwatch report [1]. Fossil fuels are followed by loans for power sector energy efficiency (13 percent of the overall EBRD energy lending), new renewables and transmission lines (each at 11 percent), and nuclear-related investments and large hydro (standing at 5 and 3 percent respectively).

“Support for coal and, to a lesser extent, for oil, has generally increased over the past six years, at a time when precisely the opposite trend should have been noted,” comments Bankwatch research coordinator Pippa Gallop, one of the authors of the study. “At the same time, the bank needs to be commended for a steady and clear increase in financing for new renewables and power sector efficiency. Nevertheless, with such conflicting trends in the bank’s energy lending, the EBRD is stretching itself thin and therefore is likely to fail in positively contributing to the global struggle against climate change.”

The Bankwatch study further analyses the EBRD’s Sustainable Energy Initiative, under which the bank lent 8.7 billion euros between 2006-2011 for efficiency improvements in the energy sector, industry and municipal infrastructure. Worryingly, the study reveals that some investments under SEI have been used to extend operations at existing coal mines or replace old coal plants with new ones. [2]

“Such investments apparently clean up production processes at coal or gas facilities,” says Bankwatch climate and energy coordinator Piotr Trzaskowski. “But in effect what they do is lend a new lease of life to old coal plants or mines or even help build new units, perpetuating unacceptable levels of CO2 emissions at a time when such operations should be shut down altogether. When global GHGs should start to fall before the end of this decade, naming construction of an efficient coal power plant as part of a Sustainable Energy Initiative is an ironic joke.” [3]

The Bankwatch study concludes with a series of recommendations for the EBRD as regards its energy lending. Among them:

make clear in its new mining policy – currently under revision – that the bank will not support coal mining
as soon as possible, adopt a new energy policy that phases out fossil fuel investments altogether starting from an immediate halt to the most climate-damaging - coal
introduce more stringent criteria for renewables (so that, for instance large hydro plants that negatively affect biodiversity are excluded from lending), better distribute support for different types of renewables, and increase renewables support in less developed countries
expand demand-side energy efficiency investments, particularly residential energy efficiency

Notes for the editors:

(1) Read the Bankwatch report “Tug of War. Fossil fuels versus green energy at the EBRD” online at:

A briefing with the main findings of the study is available at:

Interactive graphs with energy lending of the European Bank for Reconstruction and Development and the European Investment Bank available here:

(2) For examples of coal investments that the EBRD considers acceptable, look at:

or

and

(3) According to the International Energy Agency (IEA), all energy sector investments after 2017 should be in zero-carbon utilities, unless existing infrastructure is scrapped before the end of its economic life-span, if the world is to avoid disastrous climate change (keeping within 2 degrees temperature change). In this context, it is important to keep in mind that any investment that will start construction from 2014 (2013 for coal and lignite) onwards in order to be zero-carbon needs either to include CCS technology (highly unlikely given that experts project CCS to be commercially viable in the late 2020s at the earliest) or to be renewable given that the time necessary to construct a gas power plant is of a minimum of four years and the construction a coal or lignite power plant takes at least five years. From that point of view, any replacement in energy generation after 2013 for coal and 2014 for gas should be turned down by the EBRD on the basis of climate science.