What Green Energy Policy?

Europe continues to bolster the fossil fuel industry with billions of euros worth of subsidies, according to a new report.

The new report from the Overseas Development Institute (ODI) and Climate Action Network (CAN) shows the European Union is still pumping money into fossil fuel projects both at home and beyond its borders. From 2014 to 2016, EU financial instruments and public banks subsidized gas and oil production with an average of over €3 billion, or $3.5 billion, per year, the report found. 

Over €2 billion from the EU budget has been allocated to funding gas infrastructure from 2014 to 2020.

The European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) invested over €8 billion in fossil fuel projects from 2014 to 2016, and the European Fund for Strategic Investments - managed by the EIB - spent more than €1 billion on gas infrastructure in 2015 and 2016.

From 2014 to 2016, the EIB, considered the world's largest public lender, financed at least one coal project, two oil projects and 27 gas projects, in 12 EU countries. Outside the EU, the bank supported six fossil fuel projects in countries including Mongolia and Ukraine - with European public money.

The EBRD invested over €2 billion in coal, oil and gas projects in the EU, the Caucasus, Central Asia and the Middle East.

Markus Trilling, finance and subsidies policy coordinator with CAN, says this is completely incompatible with protecting the climate and has to stop. The report's authors argue that European fossil fuel subsidies not only set a poor example to the rest of the world - investing in fossil fuel infrastructure abroad actually creates dependency on carbon-intensive energy in countries that should be embracing climate-friendly development.

Between them, 11 EU member states spent over €20 billion a year on tax breaks for the fossil fuel industry. Germany, the United Kingdom and Italy topped the list for size of subsidies to fossil fuels in the transport sector - where most of the subsidies end up. Diesel in particular has benefitted from European support, including over 40 percent of Germany's transport subsidies. 

Shelagh Whitley, head of climate and energy program at ODI and co-author of the report, told DW. "A lot of subsidies were argued to be a bridge to climate solutions. Now we recognize these are not bridges," Whitley said. "Diesel is a not a solution for the transport sector and we cannot keep producing and using oil and gas to achieve the Paris goals."