The European Investment Bank (EIB) will stop funding for the vast majority of fossil fuel projects by the end of 2021.
Such a move translates into cutting around €2bn of yearly investments. The ban had been delayed by one year after lobbying by EU member states.
The BBC reports that since 2013, the EIB has funded €13.4bn of projects related to fossil fuel.
Emphasis was made on how the policy change will see the banning of most fossil fuel projects since under the new rules, energy projects applying for EIB funding will need to prove they can generate one kilowatt hour of energy while emitting less than 25o grams of carbon dioxide. This will reportedly exclude traditional gas-burning energy facilities.
Effectively, gas projects would still be a possibility through what EIB has called ‘new technologies,’ including carbon capture and storage equipment or mixing renewable gases with fossil natural gas.
The EIB’s vice-president responsible for energy Andrew McDowell commented on this being “an important first step,” adding that it will not be the last.
While environmental organisations praised the move, they expressed disappointment about the one-year delay.
Sebastien Godinot, an economist at the World Wildlife Fund was quoted by the BBC as commending the EIB and member states which fought to introduce the measure.