The EBRD plans more climate damaging loans in new energy policy draft

July 22, 2013

London – The European Bank for Reconstruction and Development (EBRD) published July 19 a draft (pdf) of its future energy policy. According to CEE Bankwatch Network, although the bank correctly depicts the urgency of transitioning towards low-carbon economies, it falls short when it comes to commitments: lending to fossil fuels is envisaged to continue, including for coal, the dirties of fossil fuels; and promises to support renewables and energy efficiency, though welcome, are not accompanied by persuasive benchmarks and timelines.

The EBRD, which between 2006 and 2011 (with the current energy policy in place) allocated 48 percent of its 6.7 billion euro energy portfolio to fossil fuels, plans to continue climate-damaging lending over the next five-six years, under the new policy.

On a positive note, coal lending criteria have been tightened via the introduction of the following set of criteria:

the project must be the least carbon-intensive of the realistically available options to meet forecast energy needs
it must be implemented in accordance with the highest standards; in the case of new power plants, this means compliance with the EU’s Industrial Emmissions Directive - IED (emission limits, the use of best available technologies); rehabilitation projects must achieve significant efficiency gains
the plant must comply with IED requirements in relation to carbon capture and storage readiness (including the availability of storage sites)

But, according to Bankwatch, the language of the draft would not prevent the bank from financing very dirty coal projects, such as expansion of the Kolubara lignite complex in Serbia or the Kosovo C plant near Pristina. In such cases, as it currently does, the bank would be able to defend financing using the argument that no investors presented clear alternatives to coal.

“The low-carbon transition appears to be a central theme of the draft strategy but when it comes to the fossil fuels sector, this only translates into a potential slight reduction in coal investments,” comments Bankwatch energy campaigner Ionut Apostol. “The draft acknowledges the carbon lock-in effect of fossil fuel infrastructure and that we must avoid this kind of effect, yet the general support for the hydrocarbons sector continues as usual. Oil and gas are the most common words used in this document. Not to mention that in this new draft, the bank opens the door to shale gas investments.”

The EBRD is set to publicly present its draft document in a public event in London on July 25, and the draft strategy is open for comments until September 30th.

CEE Bankwatch Network calls on the bank to use this time to reconsider its intention to finance coal in the future. Additionally, the EBRD should introduce a climate target for its energy sector lending (i.e., emission reductions achieved via the lending) focused on reducing carbon intensity and increasing energy efficiency and renewable energy investments while excluding the most climate damaging sectors. When it comes to the transition to low-carbon economies that the EBRD wants to support, measures must come with a concrete timeline and indicators of completion, in order to make sure that good rhetoric is translated into effective action on the ground.

“The new draft strategy of the EBRD proposes indicators for measuring the countries’ progress with energy efficiency and carbon intensity, which is definitely worth monitoring,” says Bankwatch’s EBRD coordinator, Findaka Bacheva-McGrath. “However, the strategy does not propose any targets and indicators against which the bank can measure the contribution of its own investments to achieving progress towards low-carbon economies – which should be of great interest to the public and its shareholders alike.”