EBRD to end upstream support by 2023

The EU's European Bank for Reconstruction and Development (EBRD) has vowed to end all upstream financing at the end of 2022, it announced on July 1, saying it needed to align its lending activities with Paris Agreement goals.

The decision was approved by the EBRD's board of governors at the bank's annual meeting. However, the EBRD's policy allows it to continue investing in certain midstream and downstream projects provided that they lead to reductions in emissions. This could include for example gas pipelines or LNG facilities that enable countries to cut down on their coal use.

The new commitment comes after the bank pledged last year to expand the proportion of green finance – investments that "actively promote the energy transition" – to more than 50% of its total by 2025.

"Holding the increase in the global average temperatures to well below 2°C is a global imperative to safeguard our planet and protect ourselves from climate-related risks," EBRD president Odile Renaud-Basso commented. "With today's commitment the EBRD will be at the forefront among multilateral institutions to ensure that our work is directed to helping countries achieve net zero by the middle of the century."

Many of the 38 economies that the EBRD invests in rely significantly on oil, gas and coal, with these countries on average 35% more carbon-intensive than the world average, the bank said. In seven of the nations, coal accounts for 40% of primary energy supply.

The EBRD said it would use a methodology developed jointly with other multi-lateral development banks to screen future investments to assess whether they are sufficiently low-carbon.

The bank has adopted less of a tough stance against oil and gas than the European Investment Bank, which vowed in 2019 to stop all funding for fossil fuel projects by the end of this year.