EU makes first move to end fossil fuel funding

[BRUSSELS] A preliminary text agreed by EU member states calls on the European Investment Bank to stop funding fossil fuel projects, in what would be a breakthrough in the bloc's climate policy and a blow to the coal, gas and oil industries.

The document, seen by Reuters, was agreed on Tuesday by mid-ranking representatives of the EU's 28 national governments, but still needs the green light from more senior diplomats.

The text for the first time calls on the European Investment Bank (EIB), a multilateral development bank (MDB) and the bloc's top lender, to bring to an end its multi-billion-euro funding of fossil fuel projects in a bid to reduce carbon emissions.

The EU "encourages the MDBs to adopt responsible investment policies and to phase out financing of fossil fuel projects, in particular those using solid fossil fuels, taking into account the sustainable development and energy needs of partner countries," the document said.

EIB figures show the bank funded almost 2 billion euros (S$3.01 billion) of fossil fuel projects last year and 13.4 billion euros worth since 2013.

The text will be discussed at a meeting of the EU's top diplomats later on Wednesday. Two EU officials said negotiations were still under way and the text could be changed and softened.

EU countries have long been divided over this matter. Some support the move while others, like Germany, Italy, Poland and Latvia, want the EIB to keep funding some types of gas projects to help them move away from coal or nuclear power, or for energy security reasons.

EU finance ministers are set to adopt the text at a meeting on Friday, a week before the EIB board is due to discuss its energy funding policy.

The EIB board, which is composed of the same EU finance ministers who will have to endorse the document on Friday, failed to find an agreement to end fossil fuel funding last October, as countries remained divided. 

REUTERS