The international network of NGOs "CEE Bankwatch Network" has sent an open letter to the European Bank for Reconstruction and Development (EBRD) regarding the energy transition and the reconciliation of the bank's obligations to the Paris Agreement. EcoLur Informational NGO joined the letter.
The letter says:
"To scale up energy transition, the EBRD needs to leave ‘pipe dreams’ in the past".
Some other letter might start with a personal story or captivating image of different crises we are in, to illustrate the damage that fossil fuels are causing to our societies. We might cite the Bank’s mandate and past achievements to encourage you to act.
We won’t try to do that this time.
We would simply like to call on you to implement last year’s public commitment.
In July 2021, the Bank pledged to align its operations with the Paris Agreement by the end of 2022.
In layman’s terms, complete Paris alignment means no public support to fossil fuels. It means no support to coal, oil or gas upstream, midstream or downstream.
As you must be aware, the EBRD hasn’t delivered on this yet, and recent discussions with staff and shareholders suggest this will not change in the near future.
Before it has even started, the Energy Sector Strategy revision looks like it is set to fail in moving beyond business-as-usual. The ambition to exclude fossil fuels financing from the bank’s portfolio that was building up among the EBRD ranks in the last year has almost dried up. Please, let this not be the case.
It is crucial to explicitly articulate the EBRD’s position on fossil fuels and set the date to end fossil fuel financing.
The EBRD needs to signal to its countries of operation that the clean energy transition represents the best way out of current crises: climate, energy, and cost of living.
Structural changes in the EBRD’s countries of operation must be accelerated. With the limited resources that the Bank has at its disposal, this cannot be achieved if it is trying to balance between scaling up the energy transition and financing dirty technologies.
The climate and environmental case against fossil fuels doesn’t need any reinforcement.
Fossil gas is not a transitional fuel. Due to its methane and carbon dioxide emissions, it is comparable to coal. These projects, if supported now, will operate well past 2050. The same goes for long-term contracts for fossil fuel purchases, which will require countries and clients to pay for fossil fuels longer than they would need to, preventing them from financing their energy transition.
Carbon capture and storage (CCS) and renewable hydrogen technologies are so far mainly articles of faith used by countries to boost their emissions reduction plans – not a commercial reality. And their use in the coming decades is also likely to be limited to niche, hard-to-decarbonise sectors.
The shortcomings of these technologies must be acknowledged and analysed in the EBRD’s sectoral policy, especially as they are currently primarily a means to keep fossil fuels in energy systems.
The economic arguments in favour of cost-competitive and affordable clean technologies are getting stronger each day – and so too is the energy security case. There is a clear role for the Bank in enhancing access to low-cost financing for clean energy investments that is currently missing and defining a new energy security paradigm in its countries of operations to ensure reliability and affordability while reducing emissions.
Likewise, the EBRD needs to increase its support for just transition and economic diversification policies that assist individuals and communities affected by fossil fuel phaseout, as for some countries of operation, fossil fuels are still the primary source of public revenue. This process needs to start now.
Failure to scale up clean energy and infrastructure investments will leave the countries “energy-starved”, which will invite another round of fossil fuels investments or encourage the use of old, polluting facilities to meet the demand, with the obvious adverse impacts on public health and the climate.
Therefore, the EBRD needs to set up a date for a robust and scientifically-justifiable fossil fuels exclusion policy. A too-late-too-sudden transition will cause the largest economic losses and financial instability in your countries of operation.
Weasel words — "mobilize," "advance," "finance and facilitate" or hiding behind national long term strategies (LTS) or nationally determined contributions (NDCs) that will not lead to decarbonisation don’t move the needle. Neither is it acceptable to write down the Bank’s existing practices in the new Strategy and count it as a success. The Strategy must set increased ambition and go far beyond business as usual: Climate change must be treated as the emergency it is.
Paris Agreement alignment, which was announced a year ago, needs to lead to the complete decarbonisation of the EBRD’s investments and therefore we ask the Bank to accept that it must implement a robust fossil fuel exclusion policy via its upcoming energy strategy review. The revised strategy must end new EBRD support for the exploration, production, transportation, storage, refinement, and energy end uses of coal, oil, and gas".
December 05, 2022 at 17:32