E.U. Cuts Coal-Fired Power Investment

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--New coal-fired power plants will find it virtually impossible to get funding from the European Investment Bank (EIB) in the future as the bank has announced greater support for Europe's push towards clean energy.

The EIB, which is the European Union's (E.U.'s) main lending facility, said it has adopted new guidelines to reinforce support for investment in renewable energy, energy efficiency and energy grids. Under new guidelines coal-fired plants will not be eligible for funding unless they emit less than 550 grams of carbon dioxide per kilowatt-hour (gCO2/kW). The EIB said that this target can be achieved by creating a combined heat and power plant or investing in co-generation, such as burning biomass.

"Adoption of the new lending criteria represents an important step forward in the European Investment Bank's commitment to energy investment that supports E.U. policy and reflects the urgent investment challenges currently facing the energy sector," explained Mihai Tanasescu, European Investment Bank Vice President responsible for energy lending. "Prioritising lending to energy efficiency, renewable energy, energy networks and energy RDI projects will help E.U. to meet its energy and climate objectives and create local employment across Europe. The new Emissions Performance Standard will ensure that outside these sectors the Bank's energy lending makes a sustainable and positive contribution to economic growth."

The EIB's new Emissions Performance Standard will be applied to all fossil fuel generation projects in order to "screen out investments whose carbon emissions exceed a threshold level." It said the threshold level will be continually assessed and did not rule out making the threshold more restrictive.

Although gas-fired projects will also be assessed, the EIB recognises that gas is an essential transition fuel to a low carbon energy system.

Over the past five years, the EIB as drastically cut its support for fossil-fuel based projects. During this period lending to coal and lignite power stations represented less than 1.5% of overall energy lending.

Earlier this month, the EIB said it is considering loaning U.K. firm Drax Group plc (LSE:DRX) (Selby, England) €123 million (US$160 million) to support its coal-to-biomass conversion project at the 4,000-megawatt (MW) coal-fired plant in Selby, the U.K.'s largest coal-fired plant. If granted it would help fund converting three of the six coal-fired units at the power plant for burning biomass. For additional information, see July 4, 2013, article - Drax Coal-Fired Conversion Seeks European Funding.

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