In 2004 the EIB committed that 50 percent of its lending for electricity generation should involve renewable energy technology. For 2007 it set a minimum lending target of EUR 800 million for projects involving renewable energy. At the same time, for 2007 the EIB announced a global lending target of EUR 4 billion for projects belonging to the categories of renewable energy, energy efficiency or three other areas, including energy security and research, development and innovation in energy.

These are very welcome steps, which go further than those of other international financial institutions. However, unfortunately the EIB has deemed to include large dams as renewable energy. This is a highly contested issue, given that large dams are well known to have severe social and environmental impacts of their own, with research showing that they can directly contribute to climate change via the release of the greenhouse gas methane. The EIB is involved in controversial major hydropower projects like the Nam Theun dam in Laos, the Bujagali dam in Uganda and the Lesotho highlands water project.

There is also a troubling gap between the EIB’s stated awareness of climate change and its overall lending in the energy sector – the bank maintains an ongoing alarming bias in favour of financing fossil fuels. A Bankwatch analysis in autumn 2007 of the EIB’s investments in the energy sector from 2002 to 2006 shows that out of total EIB energy investments of EUR 23.7 billion, EUR 11.3 billion went for fossil fuels, while only between EUR 3.0 and 3.6 billion went for renewable energy, depending on whether hydropower is indeed included as renewable.

A further clear gap between ‘climate awareness’ and ‘lending reality’ is the EIB’s financing of the transport sector. Lost in Transportation , a 2007 report from Bankwatch, found that between 1996 and 2005 the EIB lent EUR 112 billion for transport globally, accounting for around a third of the bank’s total investments in the period. Over half of these investments went for road and air transport, the most climate-damaging modes, and in central and eastern Europe 68 percent of the EIB’s transport investments supported these very sectors.

To really get serious about climate change, the EIB has to urgently stop financing fossil fuel projects, stop financing large dams, and turn its attention to the area of financing energy efficiency – after all, for bankers, energy efficiency measures should be a no-brainer. The EIB must also take climate change considerations into account in its transport financing. Support for public transport support is clearly more deserving than that for motorways and aviation when it comes to restricting climate change.