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 alignment | Reasoning |
|---|---|
| Paris aligned | The EBRD applies an ambitious shadow carbon pricing scheme. The mechanism is applied to all projects exceeding 20 ktCO2e/year in absolute emissions or relative (positive or negative) emissions. The mechanism goes beyond High-Level Commission on Carbon Prices (HLCCP) recommendations, with prices set at EUR 101 in 2022 and set to rise to EUR 179 by 2030 and EUR 602 by 2050 (subject to periodic review). The Bank could reach transformational status through greater inclusion of scope 3 emissions, which are generally not captured. |
The table below provides a summary of how a shadow carbon price is applied across EBRD operations.
| Which projects subject to greenhouse gas (GHG) assessment | Gross emissions or relative emissions (positive or negative) >20 ktCO2e/year. |
| Which projects apply shadow carbon pricing | All projects above the threshold. |
| Price level | The EBRD’s shadow carbon price is based on the Network for Greening the Financial System’s (NGFS) September 2022 “orderly transition” scenario, which is consistent with the 1.5 °C temperature goal. Set at EUR 101 in 2022, the shadow carbon price will go up to EUR 179 by 2030 and EUR 602 by 2050. This is beyond the HLCCP recommendation. The Bank commits to monitoring external developments and updating the prices it uses. |
| How shadow carbon price is used | The EBRD applies a shadow carbon price as part of an economic viability test, which is conducted for projects where a conclusive alignment determination has not been made in the general screening step[1], and where it is also considered “additionally informative”.[2] The EBRD tests the economic viability of projects against the relevant carbon price and calculates a “switching value” carbon price to better understand what level would change the economic merits of the project. |
| What is it compared to? | The economic viability test assesses the “gross” or “net” impacts of the proposed project by comparing it to a counterfactual scenario. There are three potential baselines: (1) “do nothing” – no project at all; (2) “do minimum” – investment equivalent to keeping existing capacity operational; or (3) “do something else” – use of alternative technology or course of action. The choice of counterfactuals depends on the specific investment and is assessed in the context of each project. A range of counterfactuals can be used to strengthen the analysis. |
| Are scope 3 emissions included? | Scope 3 greenhouse gas emissions may be taken into consideration where relevant (e.g. energy pipelines). |
Recommendation:
- The EBRD should seek to mandate more extensive emissions data collection in projects so as to be able to include scope 3 emissions in more types of projects. Their inclusion can substantially change the assessment of the environmental impact and thus are material to investment decisions.
[1] For more information, see the “Climate risk and adaptation finance” metric
[2] The test is not considered “additionally informative” if other tools provide strong evidence of alignment determination, or in cases where an assessment of economic viability is not well suited to the project type (sectors where prices are substantially deregulated and where there are significant cross-sectoral effects, i.e. mining, food production and airlines).
Last Update: April 2025