AIB targets €5bn of green loans

AIB has set a target of making €5 billion of green loans available over the next five years, including products to make homes more energy efficient, finance for electric cars and renewable energy, as the Republic seeks to become a lower-carbon economy.

The bank said in a statement provided to The Irish Times that it plans, as the State’s largest mortgage lender, to launch “propositions that will support and recognise customers committed to having a more energy-efficient home”.

Industry sources said this may include mortgages with a marginal interest rate discount for homes with a top energy rating. A spokesman declined to comment, other than to say that it is envisaged that the new offerings will be unveiled later this year.

AIB also plans to offer additional discounts through car distribution partners for the financing of the purchase of electric vehicles, according to the statement.

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"We're making AIB, at its core, a sustainable, responsible lender for a sustainable, responsible Ireland, " said Colin Hunt, AIB's chief executive of just over three months. "With these commitments we are backing our customers who are intent on addressing climate change, and tackling one of the most important challenges facing the country head on with customer solutions."

Paris Agreement

Sustainable finance products are becoming increasingly common internationally as countries seek to meet the 2015 Paris Agreement, which aims to keep temperature increases between 1.5 degrees and 2 degrees Celsius.

The United Nations Intergovernmental Panel on Climate Change warned last October that the world has only about a dozen years to keep global temperatures to a maximum of 1.5 degrees Celsius above pre-industrial levels.

Still, Central Bank officials, including recently-departed governor Philip Lane, have warned in recent months of the risks attached as the Irish economy as it moves to address climate change.

Mr Lane, who became the European Central Bank’s chief economist last weekend, said in a speech in April that “the structural transition to a low-carbon economy may be mismanaged, with both excessively slow and excessively fast adjustment paths generating financial stability risks”.

“Recognising the challenge the green transition presents for businesses and people all over Ireland, AIB is funding a body of research to be undertaken by the Economic and Social Research Institute on a range of climate-related questions,” AIB said.

“The research will enable us to inform our customers on the social dialogue of how Ireland is embracing the challenges and opportunities that climate change brings.”

AIB claims to have been the leading Irish lender in the renewable energy field last year, having set up an energy, climate action and infrastructure team in 2017.