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LONDON, July 1 (Reuters) - The European Bank for Reconstruction and Development (EBRD) will stop investing in upstream oil and gas projects as part of plans to align its activities with the goals of the Paris Agreement on climate change by the end of 2022, it said on Thursday.
The lender’s board of governors approved the decision to align with the Paris accord during a meeting on its 30th anniversary. EBRD Managing Director Harry Boyd-Carpenter told Reuters this meant the bank was ceasing investment in oil and gas exploration and production.
“We will no longer invest in upstream oil and gas projects,” Boyd-Carpenter said, though did not specify whether this applied to new or existing investment, or when the prohibition would come into force.
“However we will continue to finance select projects in the midstream and downstream sectors but only where those projects are aligned with, and significantly contribute to, the goals of the Paris Agreement.”
Midstream includes transportation and storage, while downstream involves processes such as refining and the distribution of products.
The announcement follows a pledge last year by the lender, which is majority owned by the G7 major economic powers, to raise the share of green investments in its investment activities to more than 50% by 2025.
Many of the 38 economies that the EBRD invests in, ranging from Estonia and Egypt to Morocco and Mongolia, are heavily dependent on fossil fuels.
“Holding the increase in the global average temperature to well below 2°C is a global imperative to safeguard our planet and protect ourselves from climate-related risks,” said EBRD President Odile Renaud-Basso.
The EBRD said it would use a methodology developed together with the other multilateral development banks to screen projects and ensure they were consistent with long-term progress towards low-carbon development.
EBRD countries are 35% more carbon-intensive than the world average, while highly polluting coal accounts for more than 40% of primary energy supply in seven of the nations, the bank. The lender will increase its financing for renewable energy. (Reporting by Karin Strohecker; Editing by Simon Jessop and Pravin Char)