The Bank agreed on a new energy lending policy which details the principles that will govern future projects in which it will consider investing.

These include prioritising energy efficiency and enabling decarbonisation through increased support for low or zero-carbon technology. The EIB also wants the EU to derive 32 per cent of its energy from renewable sources by 2030 and strengthen cross-border interconnections for the grid.

The bank’s new policy was approved with “overwhelming” support from the board and will bar most fossil fuel projects, including traditional use of natural gas.

“This is an important first step – this is not the last step,” Andrew McDowell, EIB vice president, told reporters during a phone call.

Over the last five years, the EIB has provided more than €65bn (£56bn) of financing for renewable energy, energy efficiency and energy distribution.

Its new “Emissions Performance Standard” will ensure that funded energy projects release no more than 250g of CO2 per Kilowatt/hour (KwH), down from the current figure of 550g CO2/KwH. This will automatically ban traditional gas-burning power plants.

The policy raises new risks for the gas industry, which has more than $200bn in liquefied natural gas projects lining up to go ahead worldwide over the next five years, aiming to provide a cleaner alternative to coal and oil.

“The EIB’s new financing criteria will make lending to gas projects very difficult,” said Nicholas Browne, a Singapore-based research director with global energy and mining consultancy Wood Mackenzie.

“In turn this would be a major strategic challenge for companies that have identified gas as the key driver of future growth,” he said.

Environmental organisations celebrated the EIB decision, but expressed disappointment that its introduction will be delayed by a year after lobbying by European Union member states.

“Hats off to the European Investment Bank and those countries who fought hard to help it set a global benchmark today,” said Sebastien Godinot, economist at WWF EU, in a press statement.

The EIB, which was established in 1958, is the biggest multilateral lender in the world and its shareholders are EU member states.

A decision on fossil fuel funding was planned for last month, but was postponed due to divisions within the bloc as some countries wanted gas funding to continue.

In 2017, the EIB funded two major energy projects in the Republic of Ireland including an electricity link with France in efforts to reduce its dependence on Britain in the wake of the Brexit vote.

The Bank agreed on a new energy lending policy which details the principles that will govern future projects in which it will consider investing.

These include prioritising energy efficiency and enabling decarbonisation through increased support for low or zero-carbon technology. The EIB also wants the EU to derive 32 per cent of its energy from renewable sources by 2030 and strengthen cross-border interconnections for the grid.

The bank’s new policy was approved with “overwhelming” support from the board and will bar most fossil fuel projects, including traditional use of natural gas.

“This is an important first step – this is not the last step,” Andrew McDowell, EIB vice president, told reporters during a phone call.

Over the last five years, the EIB has provided more than €65bn (£56bn) of financing for renewable energy, energy efficiency and energy distribution.

Its new “Emissions Performance Standard” will ensure that funded energy projects release no more than 250g of CO2 per Kilowatt/hour (KwH), down from the current figure of 550g CO2/KwH. This will automatically ban traditional gas-burning power plants.

The policy raises new risks for the gas industry, which has more than $200bn in liquefied natural gas projects lining up to go ahead worldwide over the next five years, aiming to provide a cleaner alternative to coal and oil.

“The EIB’s new financing criteria will make lending to gas projects very difficult,” said Nicholas Browne, a Singapore-based research director with global energy and mining consultancy Wood Mackenzie.

“In turn this would be a major strategic challenge for companies that have identified gas as the key driver of future growth,” he said.

Environmental organisations celebrated the EIB decision, but expressed disappointment that its introduction will be delayed by a year after lobbying by European Union member states.

“Hats off to the European Investment Bank and those countries who fought hard to help it set a global benchmark today,” said Sebastien Godinot, economist at WWF EU, in a press statement.

The EIB, which was established in 1958, is the biggest multilateral lender in the world and its shareholders are EU member states.

A decision on fossil fuel funding was planned for last month, but was postponed due to divisions within the bloc as some countries wanted gas funding to continue.

In 2017, the EIB funded two major energy projects in the Republic of Ireland including an electricity link with France in efforts to reduce its dependence on Britain in the wake of the Brexit vote.