The European Investment Bank (EIB) voted late on Thursday to stop financing fossil fuel projects from 2021, in a move that will help transform the huge lender into a climate bank.
Between 2013 and 2018, the bank, which is the largest multilateral financial institution in the world, had lent about €13.5bn (£11.5bn) to the fossil fuel sector.
The decision, from the board of the Luxembourg-based bank, comes amid a growing clean energy push within the European Union.
It will not consider new investments in the fossil fuel sector, including natural gas projects, from 2021, a year later than originally planned.
The extra year aligns with the European Commission’s plans to push natural gas as a transition fuel.
The vote came after a day of heated negotiations between representatives of EU member states. But both Germany and Italy, who had been skeptical of the change, eventually backed the policy.
Germany had previously threatened to abstain from the vote, amid domestic disagreement about the plan.
Incoming European Commission president Ursula von der Leyen has made climate change a signature issue, and has pledged to introduce a “European Green Deal” within 100 days of taking office.
As part of a proposed investment plan, up to €1tn will be unlocked for green energy investments over the next decade.
Noting that climate change was “the top issue on the political agenda”, EIB president Werner Hoyer called Thursday’s vote a “quantum leap” for the bloc’s ambitions.
“We will stop financing fossil fuels and we will launch the most ambitious climate investment strategy of any public financial institution anywhere,” Hoyer said.
The bank said that its future lending would accelerate clean energy innovation, energy efficiency and renewable energy projects.
It will also align all its financing activities with the goals of the Paris Agreement from the end of 2020.
Projects in 10 lower-income EU countries will now also be eligible for 75% financing in order to fund “specific energy investment challenges”. Currently, only 50% of a given project’s budget can be funded by a loan from the EIB.
Certain types of renewable projects in all member states will also be eligible for 75% funding.