$69 million biomass loan leads to law suit for European bank

According to Bloomberg, The European Investment Bank (EIB) is being sued over a Spanish loan that climate lawyers are claiming will damage the environment.

Bloomberg reports that not-for-profit environmental advocacy group, ClientEarth has filed the lawsuit as it wants European Union judges to determine if the EIB breached its own renewable energy-financing criteria.

The case was filed at the EU General Court in Luxembourg on the 8 January. It argues that a loan of around €60 million ($89 million) to build a biomass power plant in Galicia, northern Spain, has not been appraised correctly and is considered environmentally ‘unfit’.

Bloomberg state that the EIB had the Curtis-Teixeiro plant appraised and deemed it to be in line with its lending objectives. The bank considered the plant economically, financially, technically and environmentally sound. ClientEarth claims that the bank refused to review its loan decision despite the project being labelled low efficiency and unable to meet the EIB’s financing thresholds for renewable technologies.  

ClientEarth lawyer, Anna Heslop said, “Despite using public money, the EIB provides only minimal information about its funding decisions, and refuses to subject those decisions to the scrutiny required by EU law.”

“We hope a positive judgment will open the way for NGOs to hold the EIB to account on its funding of all kinds of projects which affect the environment, such as those with a significant climate impact,” added Heslop.

As EIB refused to internally re-examine its financing of the biomass plant, it is alleged to have denied ClientEarth’s right to a review under the Aarhus Regulation, which allows NGO’s to ask banks to review administrative decisions, reports Bloomberg.

EIB said in a statement, “The bank does not share ClientEarth’s view that such approval is an administrative act subject to internal review, and therefore finds ClientEarth’s request inadmissible under the Aarhus Regulation.”