The European Investment Bank has put in place a framework to ensure that the projects it supports — whether they be in energy, transport, industry or agricultural sectors — are aligned with the goals of the Paris Agreement. This was the purpose of the Climate Bank Roadmap.
To complete this framework, we need to address the wider activity of clients that goes beyond the project in question. For example, should the Bank support a low-carbon project such as a solar farm with a company that also wants to invest in high-carbon activities such as a coal-fired electricity plant? How can we help clients make the transition to cleaner processes?
This framework is the next step in our journey to make the Paris Agreement a success. The treaty commits all parties that signed it to “finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”
We have introduced a new approach for the alignment of counterparties. This applies to large companies active in high-emitting sectors and large financial institutions. Building on European Union regulations, this requires large companies to disclose their alignment plans, including a mid-term carbon target. Such plans should also address building resilience to future climate change. The EIB will work with clients to develop and publish these plans.
This general approach — based on disclosure — is powerful. But it also needs a bottom line for companies that intend to invest in very high carbon activities incompatible with the Paris Agreement. In general, the EIB will not support projects, including low-carbon ones, with companies that invest in activities such as the building of new coal-fired power plants or coal mines, or the destruction of carbon sinks.
For the oil-production sector, if companies cannot commit to reducing oil production over time, or if they continue to engage in incompatible activities, the Bank will only work with them on highly innovative low-carbon projects, such as carbon capture and sequestration, renewable hydrogen, advanced biofuels or floating offshore wind.
