Development banks spend 32 times more on fossil fuels than renewables

» By | Published 16 Jul 2013

CROATIAOn 1 July Croatia became the 28th member of the EU. The country has started investing in wind power – indeed it is the leader of the western Balkan region, with 193.75 MW of wind turbines in operation at the end of 2012. However a new report underlines that international financial institutions must offer more support for renewables rather than fossil fuels if Croatia and its Balkan neighbours are ever to catch up with the renewable energy capacity of other EU states.

According to the report, Invest in Haste, Repent at leisure, published by civil society organisations CEE Bankwatch Network, SEE Change Net and WWF, Europe’s development banks are spending 32 times more on fossil fuels than on non-hydropower renewable energy sources in the western Balkan region. This trend means that the western Balkan countries are heading in the opposite direction of the EU goals on climate change for the years 2020, 2030 and 2050, says the report.

It shows that almost half of the energy lending by the European Bank for Reconstruction and Development (EBRD) – the largest public lender in the region – has supported fossil fuels, with only 2% of its portfolio allocated for non-hydropower renewable energy sources, such as wind power. Fossil fuels account for 36 per cent of all energy financing by international financial institutions in the region, or €597.3 million, with renewable sources receiving just €18.5 million, or 1 per cent of funding.

The authors of the report are therefore calling for a halt to international public investments in fossil fuels and the rapid ramping up of efforts on alternative energy sources. “Renewable energy must be the priority in terms of generation, including wind, solar thermal and photovoltaic,” says the report. It also underlines the importance of “locally manufacturing components or developing community-owned renewable energy installations” to ensure that jobs and other potential local benefits are maximised.

As Commissioner Hedegaard writes in the report’s foreword, “support for energy efficiency and renewable energy sources is lagging, while governments around the world spend hundreds of billions of dollars subsidising an incipient catastrophe”.

A report published earlier this month by the International Energy Agency (IEA) stated that global power generation from hydro, wind, solar and other renewable sources will exceed that of gas and be twice that of nuclear by 2016. But for this to become reality all countries need to be able to meet their renewables potential,  and this will remain more difficult while worldwide subsidies for fossil fuels remain six times higher than economic incentives for renewables.

Read the report Invest in Haste, Repent at leisure.