(Bloomberg) -- The European Investment Bank is being sued in the European Union’s second-highest court over a Spanish loan that climate lawyers contend will damage the environment.
The suit is being brought by the not-for-profit environmental advocacy group ClientEarth, which wants the EU’s judges to determine whether the EIB breached its own renewable energy-financing criteria. The London-based group said it’s the first time an EU financial institution faces litigation over climate obligations and transparency. The EIB didn’t immediately comment on the suit.
The case, filed at the EU General Court in Luxembourg Jan. 8., focuses on a loan for as much as 60 million euros ($69 million) to build a biomass power plant in Galicia, northern Spain.
The bank refused to review its loan decision despite the project being labeled low efficiency and not meeting the EIB’s financing thresholds for renewable technologies, according to a statement by ClientEarth.
The non-governmental organization has had much success across Europe holding national and local governments to account over inadequate clean-air protection. The group won a decision at the U.K. Supreme Court by demonstrating that the government consistently breached EU clean-air regulations.
ClientEarth, along with German NGO Deutsche Umwelthilfe, also bought cases against governments in Europe’s biggest economy that resulted in the worst-polluting diesel cars being pulled off roads in some of the country’s most-congested cities.
By refusing to internally reexamine its financing of the biomass plant the EIB, the bank is alleged to have denied ClientEarth’s right to a review under what is known as the Aarhus Regulation, which allows NGOs to ask banks to review administrative decisions.
“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," said Anna Heslop, a ClientEarth lawyer. “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.”
If ClientEarth’s bid for a review fails, it can still appeal to the EU Court of Justice.
--With assistance from Stephanie Bodoni.
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