• user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:2a4817d5c1389df5b79cec46cb4b7780' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>The European Investment Bank (EIB) lends half its annual energy pot to efficiency and renewables. But it is still lending to coal. This is inconsistent with climate policies.</p>\n', created = 1508700325, expire = 1508786725, headers = '', serialized = 0 WHERE cid = '1:2a4817d5c1389df5b79cec46cb4b7780' in /home/cer/staging/includes/cache.inc on line 112.
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  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>\"The consequences are likely to be far-reaching. Not only will governments struggle to push through the needed reforms, but there is a risk of a broader backlash against the market economy and the European Union,\" said Simon Tilford of the CER,</p><p></p><p>The risk, however, is that these and other structural reforms become discredited because voters associate them with declining living standards and rising inequality, according to Simon Tilford, chief economist at the Centre for European Reform, a London think tank. \"The consequences are likely to be far-reaching. Not only will governments struggle to push through the needed reforms, but there is a risk of a broader backlash against the market economy and the European Union,\" he said.</p>', created = 1508700327, expire = 1508786727, headers = '', serialized = 0 WHERE cid = '3:a0105a06fbb973e3b5108beee2b9f742' in /home/cer/staging/includes/cache.inc on line 112.
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  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>According to Philip Whyte, a senior research fellow at the&nbsp;CER in London, to accept that the eurozone suffers from a structural flaw that can only be corrected by more federalism is politically explosive. In his <a href=\"http://www.cer.org.uk/sites/default/files/publications/attachments/pdf/2012/essay_bankingunion_5dec12-6704.pdf\" target=\"_blank\"><span style=\"text-decoration: underline;\"><span style=\"color: rgb(0, 102, 204);\">analysis</span></span></a>, he points out that a more federal structure goes at the heart of sovereignty because it allows European bodies to dictate the fate of national banks, putting taxpayers\' money at the disposal of the eurozone to solve problems in other member states. This is the reason, the analyst believes, why it takes so much time to accept the idea of a banking union and all its implications.</p><p>It is clear that a fully fledged banking union in the euro area will not emerge any time soon, Philip Whyte writes, because political constraints are too big. Acquiescing a partial federalisation, embodied in the supervisory mechanism for the banks, however, will not solve the problems, the analyst is convinced underscoring that the rest of the bitter medicine - direct recapitalisation of banks, creating a resolution mechanism and deposit guarantees - cannot be avoided. Moreover, he explains, partial solution creates another problem - destabilisation of the EU-27 by diminishing the status of the non-euro countries.</p>', created = 1508700327, expire = 1508786727, headers = '', serialized = 0 WHERE cid = '3:ce93cc6ce230422e1cfd1c41a4735734' in /home/cer/staging/includes/cache.inc on line 112.
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  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>\"For two decades Britain\'s EU debate has been one-sided: Eurosceptic politicians and commentators have set the agenda, while few politicians (or business leaders) have argued the merits of the EU,\" Charles Grant of the CER wrote in a recent paper. \"Pro-EU politicians have seen the short-term advantages of saying little about an unpopular subject. So they have lost the argument by default.\"</p>', created = 1508700327, expire = 1508786727, headers = '', serialized = 0 WHERE cid = '3:233339d68a8a06c84db000c563b06502' in /home/cer/staging/includes/cache.inc on line 112.
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  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>Europe\'s common security policy is \"stuck between the strategic realities of declining defence budgets, waning European power in the world and a lack of will and ability to project strategic force outward\", said Hugo Brady, a senior research fellow at the CER.&nbsp;\"And on the other side, political inertia to do serious stuff in defence.\"</p>', created = 1508700327, expire = 1508786727, headers = '', serialized = 0 WHERE cid = '3:3227d4f886a611271ccddf1b6a607299' in /home/cer/staging/includes/cache.inc on line 112.
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  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>\"È stata una risposta un po\' emotiva - precisa Philip Whyte economista del think-tank Centre for European Reform - nel senso che i timori politici sono apparsi dominanti sulle considerazioni tecniche\".</p>', created = 1508700327, expire = 1508786727, headers = '', serialized = 0 WHERE cid = '3:2d2a95bc47e87c107a40d6395646833f' in /home/cer/staging/includes/cache.inc on line 112.
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Time to stop the EIB’s carbon subsidies

Time to stop the EIB's carbon subsidies

Written by Stephen Tindale, 20 December 2012

The European Investment Bank (EIB) is greener than it used to be – it now lends half its annual energy pot to energy efficiency and renewables. But it is still lending to coal projects. This is inconsistent with EU climate policies, and must stop now.

Some leading politicians, such as UK Chancellor of the Exchequer George Osborne, are arguing that, given the continuing economic crisis, we cannot afford to ‘go green’ at the moment. This is a serious mistake.  Climate change is not only an environmental problem; it is already causing death and want. A recent report on vulnerability to the effects of climate change (http://daraint.org/climate-vulnerability-monitor/climate-vulnerability-monitor-2012/) found that climate change is already killing nearly 400,000 people annually world-wide each year. And it is already costing the global economy €930 billion each year.

The EU’s 2011 Energy Roadmap, a document laying out the Union’s aspirations that was backed by all member-states bar Poland, proposes the need for an 80 per cent reduction in carbon emissions by 2050. New coal-fired power stations would make it impossible to meet this target, since they emit high levels of carbon dioxide, the main greenhouse gas. Taking account of the full life-cycle (including construction and decommissioning), coal plants emit around twice the amount of carbon dioxide per unit of electricity generated as gas plants do, eight times as much as nuclear plants and 32 times as much as wind farms.

Since 2007, the EIB has lent a total of €1.88 billion to three coal projects in Slovenia, three in Poland, two in Germany and one each in Romania, Italy and Greece. It is true that the EIB does take climate change into account when making investment decisions, to some extent. Its rule is that the new plant has to replace an existing coal or lignite plant and lead to a decrease of at least 20 per cent in emissions, compared to the old plant. It also has to be ‘carbon capture ready’, so that if carbon capture and storage (CCS) proves to be effective at scale and affordable, it can be retrofitted to the plant. But that remains a very big ‘if’, and the EU’s failure so far to award any money to a CCS demonstration does not bode well for rapid progress. In practice, the requirement that a plant be carbon capture ready means little more than ensuring that a patch of land suitable for a CCS plant is left free near the new power station.

Carbon emissions, like all form of pollution, have externalities. The EU has a scheme to force the producers of the pollution to pay – the Emissions Trading System. But the price under this system is languishing below €8/tonne. This is far too low to have any impact on investment decisions. To its credit, the EIB uses instead what it calls an ‘economic price of carbon’. This is a calculation of the full costs to society of dealing with each tonne of carbon emitted, and is currently set at €30/tonne. This will increase €1 every year from now on.


However, this does not prevent the EIB from lending to coal projects without CCS. So the economic price sounds a good policy instrument, but does not actually stop the EIB from lending to projects that they think will be financially profitable. This lending amounts to a massive subsidy to coal, which undermines the renewables target.

The EIB currently takes decisions on energy projects based on the guidelines in its 2006 energy policy document. But it is consulting on a new approach, which it aims to adopt next year. The science and understanding of climate change have moved on considerably since 2006, and the situation is much more urgent. A minimum of 2 degrees of warming now looks all but inevitable – driven largely by the burning of coal. The top priority for the EIB’s new policy must be to stop lending to all coal and lignite plants unless they have CCS. Without this change, the EIB will continue to undermine the EU’s climate policies.

Stephen Tindale is an associate fellow at the Centre for European Reform.