Thousands have called on a major European development bank to end its Euro billions in financing for fossil fuels. Between 2018 and 2021, the European Bank for Reconstruction and Development (EBRD) has funded fossil fuel projects around the globe to the tune of €2.9bn.
EBRD financing fossil fuels
EBRD is one of Europe’s foremost multilateral development banks (MDBs). Countries jointly set up MDBs to provide financing to poorer nations for economic development projects. Alongside the EBRD, leading MDBs, for example, include the World Bank Group, the African Development Bank, and the Inter-American Development Bank.
Under the EBRD’s current policy, which it adopted in December 2018, the bank rules out financing for certain types of fossil fuels. For example, this includes thermal coal and upstream oil projects. Upstream refers to projects at the point of extraction.
Then in 2022, the financier extended this limit to encompass funding for upstream gas projects as well. The EBRD announced this as part of a new methodology. Specifically, it aimed to align its financing with the Paris Climate Agreement 1.5°C goal.
However, as it stands, the EBRD will still finance midstream and downstream oil and gas projects. For instance, these could include refineries, pipelines, and power plants. The EBRD is currently developing its new policy to guide investments through to 2028. Nonetheless, at present, the strategy keeps the door open to EBRD financing for these types of fossil fuel projects.
EBRD fossil fuels causing ‘carbon lock-in’
The loophole calls into question the EBRD’s claims to Paris alignment. In fact, the international financial institution is considering support for multiple fossil fuel projects. These include the Greece-North Macedonia gas interconnector – a 56km pipeline that will carry fossil gas between Thessaloniki in Greece to North Macedonia.
Non-profit CEE Bankwatch has estimated that the pipeline would generate 3m tonnes of carbon dioxide equivalent emissions each year. Significantly, this would constitute over half of North Macedonia’s 2030 carbon budget. The group argued that this is creating “carbon lock-in”. In essence, the further development of fossil fuel infrastructure maintains a country’s dependence on a carbon-emitting energy source into the future.
Moreover, campaigners have also previously placed the EBRD under fire for financing Europe’s biggest fossil fuel project. In 2017, the MDB provided a half-billion US dollar loan to the southern gas corridor project. The gas pipeline carries the fossil fuel from gas fields in the Caspian Sea to southern Italy.
In this instance, the EBRD awarded the US $500m loan to the repressive Aliyev government of Azerbaijan. A key human rights watchdog, which guides international financial institutions on their development funding, criticised the MDB for this loan. In early 2017, the Extractive Industries Transparency Initiative suspended Azerbaijan’s membership over rights concerns.
MDBs are all at it
Similarly, another leading MDB has continued to fund fossil fuel projects despite Paris alignment pledges. The World Bank Group (WBG) and its financial lending arm the International Finance Corporation have poured finances into a liquified natural gas plant in Pakistan and dirty energy power plants in Bangladesh.
More recently, local communities and non-profits in Indonesia have filed a complaint against the WBG for investing in a large-scale polluting coal-fired plant on the island of Java. Like with the EBRD, campaign groups have called out the WBG for “locking” countries into a future with fossil fuel infrastructure.
Undermining the Paris Agreement
As a result of the EBRD’s Paris non-alignment, non-profits organised a campaign to demand it divest from fossil fuels.
Campaign groups 350.org and the CEE Bankwatch Network launched an online tool to galvanise public involvement in the EBRD’s consultation on its latest strategy. Through this, over 6,200 members of the public voiced their opposition to the bank’s continued support for dirty energy projects.
In a press release about the campaign, CEE Bankwatch Network’s Gligor Radečić said:
The EBRD cannot claim it is aligned with the Paris Agreement while it is financing fossil gas projects. Using limited public funds to finance fossil fuels clearly undermines the Paris Agreement goal of keeping the 1.5 degrees Celsius within reach.
Climate crisis “already here”
The announcement followed a season of wildfires and extreme heat across the globe. A deadly blaze in Greece – where, without irony, the EBRD is financing the large new gas pipeline – was the biggest the European Union (EU) has ever recorded.
As the Canary’s Glen Black reported, Greek prime minister Kyriakos Mitsotakis said that Greece’s wildfires show that the climate crisis is “already here”. Evidently, it’s about time major development institutions started acting like it.
Feature image via ReubenGBrewer/Wikimedia, cropped and resized to 1910 by 1000, licensed under CC BY-SA 3.0
We know everyone is suffering under the Tories - but the Canary is a vital weapon in our fight back, and we need your support
The Canary Workers’ Co-op knows life is hard. The Tories are waging a class war against us we’re all having to fight. But like trade unions and community organising, truly independent working-class media is a vital weapon in our armoury.
The Canary doesn’t have the budget of the corporate media. In fact, our income is over 1,000 times less than the Guardian’s. What we do have is a radical agenda that disrupts power and amplifies marginalised communities. But we can only do this with our readers’ support.
So please, help us continue to spread messages of resistance and hope. Even the smallest donation would mean the world to us.