The European Bank for Reconstruction and Development has shifted into a higher gear in its response to climate change. Its board of governors on Thursday adopted a resolution to raise the EBRD’s climate ambition by ensuring all its activities are in line with the Paris Agreement by December 2022.However, it will not cut out all fossil fuel financing yet.The decision is a marked change from last July, when the balance between progressive and conservative forces within the EBRD was such that it was only able to say it would make a decision by the end of 2022 on when to make its investing fully aligned with Paris.That meant it fell behind the European Investment Bank, which had said in November 2019 it would align with Paris by the end of 2020.The Bank had already decided last year that by 2025, it would be “a majority green bank” with at least half its new lending going to green projects. However, in July 2020 when the EBRD announced its Green Economy Transition 2.1 approach, due to come into force in January 2021, critics said it was little better than business as usual.“Now we need to be even more ambitious,” said Odile Renaud-Basso, president of the EBRD since October, on Thursday. “Our goal is to make the shift to net zero emissions an organising principle of the Bank and its activities.”Last week, at a warm-up event for the annual meeting, Renaud-Basso told GlobalMarkets: “Our investment in fossil fuels will be declining over the next two years. We’re in the process of aligning all our financing with the Paris Agreement. As part of that, we’re getting out of upstream financing of fossil fuels. With midstream projects, we’re taking a very targeted approach.”
‘NOT AMBITIOUS ENOUGH’
This is not enough for some critics. Gligor Radečić, gas financing campaigner at the CEE Bankwatch Network, said: “We were hoping EBRD would send a signal, cutting out fossil fuel financing entirely. Keeping midstream and downstream projects is not an ambitious enough goal.“Providing financing for gas makes it less likely that recipient countries will invest in renewable energy, because they have to pay back the loans for these gas projects and their budgets are limited.”But Renaud-Basso said that the bank needed to take transition steps to decarbonise in countries that were still heavily dependent on coal. “It’s not easy to go straight to renewable energy sources when you’re at 70% coal,” she said. “Renewable energy is not easy in some countries, because of limited solar or hydroelectric opportunities, and there can be issues with intermittence.”Renaud-Basso said this was “an important discussion with shareholders. They have determined we can have midstream investment in gas as a transitional solution, but subject to clear strategic commitments from the country to implement the Paris Agreement, and have a clear long term strategy to bring down emissions to net zero by specific dates.”