European Investment Bank to face legal action over biomass loan

The world's largest multilateral finance firm is set to be taken to the European Union's highest court later this year, after green campaigners argued its decision to loan €60m (£53m) to developers building a biomass facility in Spain.

European Investment Bank to face legal action over biomass loan

The EIB has issued more than €23bn (£20bn) through Climate Awareness Bonds since 2007

Last April, the European Investment Bank (EIB) announced its decision to award a loan of up to €60m to the firms behind the Curtis-Teixeiro plant – a biomass facility set to be powered using locally sourced forestry waste after its 2020 completion date.

Environmental law firm ClientEarth then demanded a review of the EIB’s decision, claiming that it breached the bank’s responsible investment principles, which aim to prioritise funding for renewable energy projects while limiting funding for carbon-heavy developments.

Specifically, ClientEarth argued that the facility would not be resource and energy-efficient, producing “very low” levels of power in comparison to the amount of fuel burned.

The EIB provided ClientEarth with more information on the facility but concluded in October 2018 that it would not be changing its decision to fund the project, near Galicia in Northern Spain.

ClientEarth announced on Monday (14 January) that it would, therefore, be taking the EIB to court over its refusal to withdraw funding from the biomass project. The group cited concerns that the bank had broken the EU’s Aarhus Regulation. This policy framework gives NGOs the right to request an internal review of administrative acts adopted by an EU body under environmental law.

“This case shines a light on the lack of transparency in the EIB’s approach to funding projects, some of which have a huge environmental impact,” ClientEarth’s wildlife project leader Anna Heslop said.

“Despite using public money, the EIB provides only minimal information about its funding decisions and refuses to subject those decisions to the scrutiny required by EU law, including the Aarhus Regulation.”

The decision by ClientEarth marks the first time in history that the EIB has faced legal action from an NGO. If the law firm is unsuccessful in its bid, it has the option to appeal to the EU Court of Justice.

“We hope a positive judgment will open the way for NGOs to hold the EIB to account on its funding of all kinds of projects which affect the environment, such as those with a significant climate impact,” Heslop added.

‘Environmentally sound’

Responding to the announcement from ClientEarth, an EIB spokesperson said the bank’s decision to invest in the Curtis-Teixeiro plant had been deemed “economically, financially, technically and environmentally sound”.

“The Curtis-Teixeiro plant was appraised and deemed to be in line with our lending objectives,” they said in a statement.

“The bank does not share ClientEarth’s view that such approval is an administrative act subject to internal review, and therefore finds ClientEarth’s request inadmissible under the Aarhus Regulation.”

In related news, the UK Government has this week unveiled plans to limit the sale of biomass stoves as part of its new Clean Air Strategy. Published on Monday, the policy framework details a phase-out the sale of all but the cleanest biomass stoves by 2022.

Sarah George

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