Need to divest: EU climate financing channels billions into fossil fuels
By on 6 septembre 2016
In the “year of delivery” of the Energy Union, the EU is losing its role as international climate leader. The Union is still far away from ratifying the global Paris climate agreement, as it scrambles to recover from the Brexit shockwaves. The US and China have recently ratified the Paris Agreement, whereas the EU is being considered as “a potential stumbling block” to the entry in force of the climate treaty.
In the field of climate financing, the EU is also trailing behind. Renewable energy investments have plummeted by a staggering 18% in 2015 in the EU. At the same time, emerging countries in Latin America (Brazil, Chile, Mexico), Africa (Morocco) and Asia (China, India) are seeing record increases in renewable energy funding.
What is the EU doing to turn the tide and regain its climate leadership role ?
Not enough, as a recent briefing by CAN Europe shows. In contradiction with the goals of the Paris Agreement, the EU is still pouring billions of Euros into fossil fuel projects. The EIB and the EBRD, the EU’s major investment banks, have committed more than €12 billion for funding fossil fuel projects. The Structural Funds and the Connecting Europe Facility are channeling a combined €1,6 billion Euro into new fossil fuel infrastructure until 2020, as the CAN Europe briefing outlines. The EU’s supposed climate policy pillar, the ETS, has put such a low price on carbon, that it is now more expensive to consume a glass of Belgian beer than it is to pollute a tonne of CO2 on the European carbon market.
The EU has promised to phase out fossil fuel subsidies by 2020, but currently is way off track to achieve this goal. In order to be in line with the promises of the Paris Agreement, the EU needs to follow suit of the successful divest policies of cities worldwide. Cities like Lille, Berlin, Oslo or Copenhagen have already divested from fossil fuels, and many more are lining up similar policies.
If the EU wants to regain its role as international climate leader, it has to stop funding fossil fuel infrastructure, which is destined to become stranded assets in a post-carbon world. By channeling EU funds into local energy efficiency, renewable energy and energy storage projects, the EU can set itself effectively on the trajectory of the Paris Agreement. The ongoing discussions on a new EU budget (Multi-Annual Financial Framework) offers the EU a valuable opportunity to kickstart divestment from fossil fuels and rebuild its energy economy on sustainable energy sources.
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