Almost half of the finance that the EBRD provided for energy projects over the six years to 2011 was devoted to fossil fuels despite the bank’s commitment to tackling climate change, a campaigning organisation claimed yesterday.
CEE Bankwatch Network, an NGO that monitors the EBRD, said 48% of the bank’s E6.7 billion energy loans and equity between 2006 and 2011 – or E3.26 billion – had gone to fossil fuels.
“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,” said Bankwatch research coordinator Pippa Gallop.
She praised the multilateral lender for a “steady and clear” increase in financing for new renewables and power sector efficiency but said the positive impact would be wiped out unless it stopped support for coal, oil and gas.
Its report showed that loans for power sector energy efficiency took up 13% of overall EBRD energy lending, new renewables and transmission lines both made up 11%, nuclear-related investments 5% and large hydro 3%.
“The bank needs to be commended for a steady and clear increase in financing for new renewables and power sector efficiency,” she said. “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.”
Bankwatch also analyzed the EBRD’s Sustainable Energy Initiative, under which the bank lent E8.7 billion between 2006-2011 for efficiency improvements in the energy sector, industry and municipal infrastructure.
It found some SEI investments had been used to extend operations at existing coal mines or replace old coal plants with new ones. The EBRD will launch phase 3 of the SEI later this morning.
Climate and energy coordinator Piotr Trzaskowski said rather than cleaning up production processes at coal or gas facilities, these investments gave a “new lease of life” to old coal plants or mines and helped build new units.
“[This] perpetuates unacceptable levels of CO2 emissions at a time when such operations should be shut down altogether,” he said. Given that greenhouse gases should start to fall before the end of this decade, he said that classifying construction of an efficient coal power plant as part of a SEI was “an ironic joke”.
It called on the bank to set more stringent criteria for renewable, better distributed support for different types of renewables, and to increase renewables support in less developed countries.
The EBRD said the bank had invested more than €9 billion in energy efficiency and renewable energy projects with a total value of €46 billion over the last six years. “Our priorities are clear enough,” a spokesman told Emerging Markets. “Last year we invested ten times as much in renewable energy as in fossil fuel-based power generation.”
He said that fossil fuel sources and coal in particular were likely to remain an important part of our region’s energy mix for many years to come. “Encouraging efficiency in this sector – and promoting higher environmental standards – can go a long way towards mitigating climate change,” he said.