Non-fossil to fossil energy ratio and scaling up climate investment in all sectors

Explanation

The EIB has one of the best clean to fossil finance flow ratios among the MDBs. Over 2019–2022, for every USD 1 the EIB invested in fossil fuels, it invested USD 14.5 (up from USD 2.9 over 2015–2018) in clean energy, USD 3.7 (up from USD 1.2 over 2015–2018) for transmission and distribution, and USD 1.5 (up from USD 0.4 over 2015–2018) for other energy projects (that typically  cannot be attributed to any one energy type, such as large nuclear, hydropower, and biomass projects). Given its leading position in prioritising clean energy financing combined with the sheer size of its disbursements, the EIB has provided the largest absolute amount of financing to clean energy among the MDBs in this period.

In its 2019 EIB Energy Lending Policy (ELP), the EIB was the first MDB to commit to the phase-out of all fossil fuel financing by the end of 2021. Its 2023 Energy Overview Report affirms that this target has been achieved, with no investments in fossil fuels since the beginning of 2022. This claim has been corroborated by the OCI database and other independent stakeholders. As the data presented in the paragraph above predates this milestone, it does not fully capture the impact of the implementation of the ELP.  If this full phase-out is upheld over a three-year period, the EIB will become the first MDB to be rated “transformational” by E3G on this metric.

Climate finance

Climate finance as a percentage of EIB operations has been increasing at a highly encouraging rate. In 2023, climate action and environmental sustainability finance represented60%[1] of financing, up from 31% in 2019, 37% in 2020, 51% in 2021 and 56% in 2022 and same levels of 60% in 2023. This is among the highest level of climate finance (as a percentage of total operations) observed among MDBs. The EIB Group is therefore well on its way to exceeding its target for at least 50% of finance to target climate and environmental sustainability by 2025, set in the Climate Bank Roadmap 2021–2025.

The EIB Climate Bank Roadmap also set an EIB Group target of supporting EUR 1 trillion in green investment from 2021 to 2030. The Bank is well on its way to achieving this if the recent annual scale of investments is upheld, with cumulative supported investments of EUR 563 billion in climate action and environmental sustainability projects between 2021 and 2023.

However, the goalposts of the financing needs for the green transition are shifting. In 2021, the European Commission and EIB stated that the EU alone needed to increase investments by EUR 350 billion per year in the decade to 2030 to deliver on the climate aspects of the European Green Deal and its emissions reduction target. In 2022, this figure was revised upwards to EUR 390 billion (with an additional EUR 130 billion needed for other environmental objectives) per year.  In light of the increased financing needs, at the 2024 EIB Group Forum European Commission Climate Action Commissioner Hoekstra called for raising the EIB’s climate financing target to build on its ambition to date.

Recommendation: 

• The EIB could use the impending update of the Climate Bank Roadmap (covering 2026–2030) to reflect the rapidly growing demand for green investments in the EU and beyond. Specifically,
  it is recommended the EIB increases its climate action and environmental sustainability target beyond the current 50% of its overall financing. When determining this new target, the EIB should consider the forecasted annual green financing needs within the EU.

[1] Information obtained directly from the Bank