European Investment Bank

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
Paris alignedPhasing out unabated fossil fuel investments from end 2021 with a number of limited exceptions; exclusions on coal and upstream oil and gas already implemented.
 Alignment and Reasoning
Coal policiesExcludes coal.
Upstream oil and gas policiesExcludes upstream oil and gas. Policies already in action.
Downstream oil and gas policies Excludes downstream oil and gas.
Supply-side energy efficiency Sets out an emission performance standard of 250g CO2 per kWh Will support fossil fuel efficiency projects.


In November 2019 the Board of the European Investment Bank (EIB) agreed a new Energy Lending Policy. In it the EIB stated that “the Bank will phase out support to energy projects reliant on unabated fossil fuels”, with a number of limited exceptions. This was a major milestone in MDB policies on fossil fuels and is an example of real transformational leadership from the EIB. We have therefore assessed the EIB as Paris aligned in this area, although projects that were already under appraisal in November 2019 can still be approved until end of 2021. 

The following activities were specifically excluded:  

  1. the production of oil and natural gas;
  2. traditional gas infrastructure (networks, storage and refining facilities);
  3. power generation technologies resulting in GHG emissions above 250 gCO2 per kWh of electricity generated, averaged over the lifetime for gas-fired power plants seeking to integrate low carbon fuels (this replaced the previous Emissions Performance Standard of 550gCO2/kWh and effectively excluded coal, oil and unabated natural gas);
  4. large-scale heat production infrastructure based on unabated oil, natural gas, coal or peat and;
  5. energy infrastructure directly associated with unabated fossil fuels (coal mining and infrastructure dedicated to coal, oil and natural gas including networks, liquefied natural gas terminals and storage). 

The following exceptions to the fossil fuel exclusion were agreed however: 

  1. projects included under the 4th list of Projects of Common Interest co-financed with the EU budget, and approved by the Board by end 2021, subject to projects passing the EIB’s own cost benefit analysis; 
  2. gas-fired power plants which provide a credible plan to blend increasing shares of low-carbon gas over the economic lifetime of the project, such that the emission standard of 250g CO2e/kWhe is met on average over that economic lifetime (questions remain as to how such a “credible plan” would be defined and enforced); 
  3. gas network projects that are planned to transport low carbon gases, including the rehabilitation and adaptation of existing gas infrastructures when it is part of this goal (again questions remain on how such “plans” are defined and enforced, and how certain these plans have to be; and how GHG and economic risks of these projects will be assessed and mitigated); and 
  4. efficient gas-fired small boilers applicable for buildings or SMEs where in line with the EU Eco-Design Directive, or appropriate standards outside the EU (Eco-Design is a basic legal requirement for selling boilers in the EU market). 

The EIB also signed the “Statement on International Public Support for the Clean Energy Transition” at COP26. Amongst other things, this statement commits the signatories to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022, except in limited and clearly defined circumstances that are consistent with a 1.5°C warming limit and the goals of the Paris Agreement.” The EIB was the only MDB to sign this statement, demonstrating leadership.

At COP26, EIB has signed the Statement on International Public Support for the Clean Energy Transition in which the Bank commits to end new direct public support for the international unabated fossil fuel energy sector by the end of 2022; except in limited and clearly defined circumstances that are consistent with a 1.5c warming limit and the goals of the Paris Agreement.

Recommendation: In order to address the risk of project promoters not complying with “credible plans” to blend low-carbon gas into gas-fired power plants, the EIB should consider introducing an environmental indemnity clause in its contracts with these projects to ensure immediate repayment if the plan is not adhered to. 

Recommendation: The language around investments in gas infrastructure projects that have plans to transport low carbon gases should be amended during the mid-term review to state that this should only apply when existing infrastructure is being adapted with a credible and imminent high blend of low-carbon gases. This part of the Energy Lending Policy should also address how the low carbon gases are produced (green or blue hydrogen). 

Recommendation: The mid-term review of the EIB Energy Lending Policy should consider whether the exception for small gas-fired boilers should be deleted or revised to include only hybrid electric-gas systems and whether the EIB can provide additionality in this market given the widespread availability of private capital for this technology. 

Recommendation: In the mid-term review of the Energy Lending Policy the EIB should consider introducing a provision for the EIB to invest in the retirement, replacement and refinancing of high carbon infrastructure such as coal mining and power generation infrastructure and oil and gas infrastructure, building on experience in this area in the USA and amongst other MDBs. 

The mid-term review is specifically aimed at integrating the outcomes of the EU Sustainable Taxonomy, once this has been finalised. It should be noted that the Technical Expert Group on the taxonomy recommended an Emissions Performance Standard of 100g CO2e/Kwhe, reducing to 0g to 2050 in order to make a substantial contribution to climate change mitigation.  

Supply-side energy efficiency 

The 2019 EIB Energy Lending Policy sets out an emission performance standard of 250 g CO2 per kWh. This level allows the EIB to finance the most efficient combined heat and power projects and rules out coal to gas switching, unless gas-fired power plants provide a credible plan to blend increasing shares of low-carbon gas over the economic lifetime of the project. 

For cogeneration to be considered an energy efficiency investment, the project will need to meet both criteria listed below. 

  1. At least 50% of generated electricity comes from high-efficiency cogeneration, i.e. at least 50% of generated electricity is cogenerated and Primary Energy Savings (PES) for this cogenerated electricity and useful heat reach at least 10% (principal criterion);  
  2. At least 5% net PES is achieved on an annual basis for the entire generated electricity and useful heat (additional safeguarding criterion).  

For gas-fired co/tri-generation, the project is eligible for the Bank support if it results in emissions in the production of power of less than 250g CO2 per kWh. This threshold will likely be reduced to 100 gCO2 per kWh as this is what the draft EU Taxonomy for Sustainable Finance proposes.


Last Update: January 2022

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