The EIB Decides against Gas—Now What?
November 21, 2019
On November 14, 2019, the European Investment Bank (EIB) adopted a new climate strategy, choosing “to end the financing … of unabated fossil fuel projects, including gas, from the end of 2021.” The ban reveals the precarious position of gas but also raises a more basic question: what projects was the EIB financing in gas and, thus, what impact might the decision have?
This decision will mostly impact countries in the European Union (EU), which have received the bulk of EIB’s gas financing. Since 2010, the EIB has loaned €19.4 billion for gas projects, and 84 percent of that went to EU countries (see note below). Another €890 million went to projects that link to European gas: for example, the Trans-Anatolian and Trans Adriatic gas pipelines or to countries bordering the EU. Outside the EU, the EIB mostly financed gas projects in Egypt and Tunisia for gas production (and associated infrastructure) or power generation, so Egypt, especially, will be affected, having received €1.1 billion since 2010.
In the EU, most of the money has supported domestic gas networks: €10.3 billion since 2010, of which three countries—Italy, Spain, and the United Kingdom—take up €8.7 billion. Beyond networks, the EIB lent money for gas storage (€1.6 billion), power generation (€1.4 billion), cross-border pipelines (€1.3 billion), gas production (€1 billion) and liquefied natural gas imports (€703 million).
The impact on gas is thus concentrated in a few countries and activities. Without public help, will gas investments still happen? This is a hard question to answer, but consider this: Italy, Spain, the United Kingdom and Greece received €12.5 billion for gas projects since 2010, and together they used 184 billion cubic meters of gas in 2018. Four other countries with similar consumption—Germany, France, Belgium and the Netherlands—took in just €840 million from the EIB. So, is public finance a “must have” or a “nice to have”? In a way, the EIB decision serves as a real-life experiment to help us answer that question.
Notes on methodology
Identifying “gas projects” is subjective. The EIB publishes a complete list of “projects financed,” and the list includes a category for “energy” but going from energy to gas is hard. Since June 2013, the dataset rarely includes a project description, so each project needs to be screened individually. Sometimes, where a project fits is clear. Other times, it straddles several categories: it might include gas and power networks or support a broader infrastructure push. Occasionally the language is murky: a coal plant is listed as a “thermal plant,” a gas production program is listed under “security of supply,” a loan to help Ukraine’s Naftogaz to buy gas is shown as a “guarantee for economic development in Ukraine,” and so on. Different people might read this data differently.