Paris-aligned or Paris-misaligned? Fossil fuel financing under the European Bank for Reconstruction and Development's Paris alignment methodology

This research paper analyzes the European Bank for Reconstruction and Development's (EBRD) new Paris alignment methodology released in December 2022. While the methodology expands exclusions for fossil fuel financing, the author argues it remains insufficient because it does not fully exclude midstream and downstream gas infrastructure, potentially allowing projects that are inconsistent with a 1.5°C warming limit.

• The EBRD's Paris alignment methodology, effective January 1, 2023, expands the list of excluded fossil fuel investments to include upstream gas and most midstream and downstream oil projects, though the latter may be permitted in rare cases for environmental remediation or emissions reductions.
• Midstream and downstream gas projects are not outright excluded but must meet a set of cumulative criteria to be considered aligned. These include being located in a country with a credible decarbonization commitment, being essential to a low-carbon strategy, having a methane leakage control plan, not being ruled out by the country's NDC, having low carbon lock-in risk, and remaining economically viable under a shadow carbon price.
• A significant exception exists where any investment meeting the EU taxonomy for sustainable activities' criteria for a 'substantial contribution' to climate change mitigation is automatically deemed aligned, bypassing the EBRD's specific gas criteria.
• Between 2018 and 2021, the EBRD's financial activity included EUR 5.6 billion invested in clean energy and EUR 2.9 billion invested in fossil fuel energy.
• The author recommends that the EBRD use its 2023 Energy Sector Strategy review to extend fossil fuel exclusions to cover all midstream and downstream gas, aligning the bank with the Glasgow Statement on International Public Support for the Clean Energy Transition.

APA

Jones,, N. (2023). Paris-aligned or Paris-misaligned? Fossil fuel financing under the European Bank for Reconstruction and Development's Paris alignment methodology. International Institute for Sustainable Development. https://www.iisd.org/articles/policy-analysis/paris-aligned-or-paris-misaligned-ebrd

Chicago

Jones,, Natalie. Paris-aligned or Paris-misaligned? Fossil fuel financing under the European Bank for Reconstruction and Development's Paris alignment methodology. International Institute for Sustainable Development, 2023. https://www.iisd.org/articles/policy-analysis/paris-aligned-or-paris-misaligned-ebrd.

Wikipedia

{{cite report |last1=Jones, |first1=Natalie |title=Paris-aligned or Paris-misaligned? Fossil fuel financing under the European Bank for Reconstruction and Development's Paris alignment methodology |publisher=International Institute for Sustainable Development |date=21 March 2023 |url=https://www.iisd.org/articles/policy-analysis/paris-aligned-or-paris-misaligned-ebrd |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jones2023parisaligned, author = {Jones,, Natalie}, title = {{Paris-aligned or Paris-misaligned? Fossil fuel financing under the European Bank for Reconstruction and Development's Paris alignment methodology}}, institution = {International Institute for Sustainable Development}, year = {2023}, month = mar, url = {https://www.iisd.org/articles/policy-analysis/paris-aligned-or-paris-misaligned-ebrd}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }