European Bank for Reconstruction and Development

Fossil fuel exclusion policies

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs

Paris AlignmentReasoning
Some ProgressExclusion of coal and upstream oil and gas.
 Alignment and Reasoning
Coal policiesCoal and associated infrastructure excluded.
Upstream oil and gas policiesNo upstream oil or gas financing from 2023
Downstream oil and gas policies This will be subject to the Paris alignment methodology of the EBRD
Supply-side energy efficiency Will finance efficiency in the hydrocarbon sector. Supports installation of coal to highly efficient gas fuel switching.



In December 2018, the EBRD’s Board of Directors adopted its Energy Sector Strategy for 2019-2023. As part of this, the Bank will “not finance thermal coal mining or coal-fired electricity generation capacity” (including upgrades to existing plants or the construction of new capacity).  

In addition, the Strategy states that the Bank will not finance port terminals principally dedicated to thermal coal, nor will it finance transport links principally dedicated to carrying thermal coal (for example, a rail line transporting coal from a mine or port terminal to a power generation plant).   

For district heating the Bank will not finance any investment in coal-fired heat-generating plants. It may, however, finance district heating companies that use coal as part of their energy mix provided that the investment is not related to, or is outside the boundary of, coal-based heat generation. In such instances its focus will be on energy efficiency investments such as network rehabilitation, installation of modern controls, improved metering and demand-side measures. 

Oil and gas 

In the 2018 Energy Sector Strategy the EBRD stated that it would “not finance any upstream oil exploration; and not finance upstream oil development projects except in rare and exceptional circumstances where the projects reduce greenhouse gas emissions or flaring”.  

At the 2021 annual meetings, the bank then went one step further. It stated it would reach ‘full Paris alignment’ by 2023. As part of this, the bank stated it will not longer finance any upstream oil or gas projects, this is assumed to also be from 2023. 

The Paris alignment methodology of the EBRD supersedes the energy strategy in regard to assessing whether some oil and gas project should be financed due to the number of tests within the methodology. However, there is a concern that these tests are not stringent enough to prevent carbon lock-in occurring. These tests, undertaken sequentially are:

  1. Test against NDCs and long-term strategies
  2. Test against low carbon pathways (‘country endorsed pathways’ will be the default pathway)
  3. Tested for carbon lock-in
  4. Economic assessment including shadow carbon pricing.

The series of criteria for gas investments in the energy strategy are that a project must: 

  1. not displace less carbon-intensive sources, or lead to carbon lock-in or stranded assets.  
  2. be subject to the EBRD’s usual economic assessments of projects, which will account for key externalities and apply a shadow price of carbon.  
  3. be consistent with NDCs and the Bank’s Environmental and Social Policy (including requirements for using best available techniques).

The EBRD Energy Sector Strategy is currently valid until 2023, which suggests that a review process should begin in mid-2022. 

Recommendation: The EBRD should bring forward its review of its Energy Sector Strategy to early 2022 , and reconsider its policy around downstream oil and gas in particular. It should look to adopt any best practices from the EIB in this area. 

Supply-side energy efficiency 

The EBRD’s energy strategy allows fuel switching to less carbon-intensive sources, in particular from coal to gas (and renewables). 

The EBRD will finance network rehabilitation, installation of modern controls and metering for district heating companies that use coal as part of their energy mix provided that the investment is not related to, or is outside the boundary of, coal-based heat generation.  

The Bank may finance environmental and efficiency upgrades of existing coal heat generators, located within industrial facilities, supplying heat to industrial processes and/or district heating networks; provided that as a result of the investments, the specific units comply with EU emissions limits and Best Available Techniques requirements. 

Supporting energy-efficiency improvements along the oil and gas value chains (for example, waste-heat recovery) and increasing the capacity of companies to adopt energy-efficiency improvements are also included. 

Last Update: October 2021

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