The EIB wants to reduce support for roads in favor of environmentally friendly transport options


The European Investment Bank (EIB), a major financier of Ireland’s transport infrastructure, will cut its support for roads in favor of alternatives as it shifts the focus to meeting climate change targets.

The EIB is a major lender to Ireland’s road infrastructure, accounting for the bulk of its €3.8 billion in multi-decade transport loans, including support for the development of national motorways. The Bank has also helped finance rail, port and airport infrastructure including the Luas and Dublin Airport’s new runway.

Transport accounts for just under €1 of every €5 invested by the EIB in Ireland, an EU body which can use the leverage of Member States’ collective support to raise money cheaply in the markets and channel it to public authorities, including schools and universities, the private sector, as long as the targets contribute to achieving EU policy objectives.

The change in focus was revealed by EIB Vice-President Kris Peeters in an interview with the financial times on the sidelines of the G20 summit in Bali. Mr Peeters said he was “convinced” the EIB would invest less in roads and more in other elements of transport infrastructure.

The EIB will publish a new five-year lending policy for the transport sector this month.

A change in the EIB’s focus will potentially create a funding gap as national governments and local authorities continue to pursue new road infrastructure projects. However, train, bicycle and other alternatives could be easier to secure.

The EIB is likely to be a forerunner in a broader trend for all lenders as environmental, social and governance criteria become more important in lending decisions.

Banks and companies can already secure cheaper financing in bond markets if they commit to using the money raised only for projects that meet ESG criteria, including mortgage loans only for homes with higher building energy ratings. Many in the financial markets expect this to be complemented in time by a regulatory push against less ESG-friendly lending.

Earlier this month, the ECB said its first climate stress test of the euro area banking sector found that many lenders had significantly understated the potential losses they face from climate change, a signal
Less green lending is discouraged by regulators. The EIB wants to reduce support for roads in favor of environmentally friendly transport options

Fry Electronics Team

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