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 |
|---|---|
| Transformational | The EIB’s shadow carbon price mechanism represents best practice among peers and sets a transformational precedent. It aligns and goes significantly beyond the High-Level Commission on Carbon Prices (HLCCP) recommendation as it is based on a 1.5 °C IPCC scenario, with a price to increase to EUR 250 by 2030 and EUR 800 by 2050. The mechanism is applied to all projects above the emission threshold of 20 ktCO2/year (absolute or relative emissions). The shadow carbon price (SCP), used in the Bank’s economic assessments of projects, is one of the main elements of the transition risk framework used at project level. Furthermore, the SCP is periodically reviewed and updated in line with the latest science. |
The table below provides a summary of how a shadow carbon price is applied across EIB operations.
| Which projects subject to greenhouse gas (GHG) assessment | All projects which exceed a 20 ktCO2/year absolute emissions or relative emissions threshold. |
| Which projects apply shadow carbon pricing | All projects subject to GHG assessment which exceed the threshold. |
| Price level | The EIB’s shadow carbon price aligns with and goes significantly beyond the HLCCP recommendation as it is based on a 1.5 °C IPCC scenario. The EIB policy states its SCP will be periodically updated in line with the latest science. The EIB SCP will increase to EUR 250 per tonne by 2030. By 2050, it will rise to EUR 800 per tonne. |
| How shadow carbon price is used | The EIB applies a shadow carbon price as part of its economic assessment for projects in all sectors, where a cost–benefit analysis is conducted within the framework of climate and transition risk assessment. A dynamic pricing approach is used, meaning that a higher carbon price is applied to assess the economic case for low-carbon projects, while a central carbon price is used to appraise the economic case for conventional technologies. This approach helps to incorporate climate-related risks and opportunities into project evaluations. |
| What is it compared to? | The EIB incorporates shadow carbon pricing into its evaluation process, using economic assessment as the primary tool for project evaluation. The counterfactual scenario is based on a “without-project” scenario option reflecting a baseline of maintaining business as usual. Alternative project options are only considered in specific cases where they can deliver the same outcome. Country policy context is also important in the assessment, particularly if consumer electricity prices already include a carbon price, which is then factored into the evaluation. |
| Are scope 3 emissions included? | Scope 3 emissions may be taken into consideration, where they are considered relevant. This is thought to include transport projects, as well as some energy network projects and industrial installations. |
The EIB employs a transformational shadow carbon pricing mechanism that sets a global benchmark for best practice, grounded in a 1.5 °C IPCC scenario. This pricing exceeds the recommendations of the High-Level Commission on Carbon Prices (HLCCP), with rates dynamically increasing to EUR 250 per tonne by 2030 and EUR 800 by 2050. Applied to projects emitting over 20 ktCO2/year, the mechanism integrates climate and transition risk assessments, selectively incorporating scope 3 emissions for significant energy, transport, and industry projects.
As part of its Climate Bank Roadmap, the EIB reinforces its commitment to this mechanism, in use since the 1990s, as a core tool for evaluating projects’ societal and climate contributions. By aligning with science and extending beyond 2030, the EIB ensures its shadow carbon pricing remains a leader in ambition and rigor, as demonstrated by comparisons to the HLCCP framework. This approach solidifies the Bank’s leadership in aligning financial decisions with climate goals.
Last Update: April 2025