A £700 million (€777m) fund to tackle the lack of finance for the UK’s onshore wind farm developers and a €100m loan to finance renewable energy projects in Pakistan – these are two new, headline-grabbing deals announced by the European Investment Bank (EIB) over the past month in the run-up to the crunch UN-sponsored climate change negotiations in Copenhagen.

They are deals for which the EU’s bank should rightly be proud. Indeed, the Pakistan loan represents “a trail-blazing approach”, just as the EIB’s vice-president, Carlos da Silva Costa, has said

Yet the bigger blaze generated by the bank’s energy lending continues to come from the flares of gas and oil fields. CEE Bankwatch Network has found that, between 2002 and 2008, the EIB lent €18 billion to the extractive industries sector, for oil, gas and coal projects. These are carbon-heavy investments that will continue to send millions of tonnes of carbon dioxide into the atmosphere until 2040.

This investment accounts for 49% of the EIB’s lending to the entire energy sector (that is, the generation and transmission businesses) during that period. Even more striking are the figures for the actual energy generated from projects in which the EIB invested: fossil fuels had a 69% share, while renewables accounted for 23%.

Belatedly, the EIB is changing its lending patterns. Over that seven-year period, it lent €6bn to renewable-energy projects; in the last year of that period, in 2008, it lent roughly €1.39bn for renewable-energy projects within the EU states, the major portion of the EIB’s lending to renewables projects worldwide, which totalled slightly over €1.5bn. (Those figures leave out a number of investments into hydroelectric projects, since they are environmentally damaging.) The upswing in its support for green energy is continuing, with bank officials predicting overall renewables lending to comfortably top €2bn by the end of this year.

But this change needs to be viewed within the context of the dirty-energy legacy the bank has bequeathed for many years, as well as the high-level indications that the EIB may fund up to one-quarter of the €8bn Nabucco gas pipeline, not to mention indications that it may be about to enter into commitments totalling several billion euros with oil and gas rich Kazakhstan.

“The Bank must acknowledge that its continued financing of new coal and other fossil-fuel projects undermines its credibility. Its increasing portfolio of renewable energy projects is very welcome. But this proportion is still overshadowed by financing for coal and other projects that represent a huge investment in cumulative increased CO2 for decades to come”: those words were written by former Irish president Mary Robinson and Alice Miller in a paper published this week. Their words referred to the World Bank, but they could have been applied with equal, if not more, validity to the EIB: it is twice as large a lender to the energy sector as the World Bank.

More crucially, any chest-thumping by the EIB about the undoubtedly positive trends in its renewable-energy lending need to be considered in the perspective of climate-change maths. The European Commission believes €13bn-18bn per year needs to be invested into low-carbon and sustainable-energy sources for the EU to meet its 2020 target to reduce overall emissions by 20% and to increase the share of renewables in the energy mix to 20%, while the Dutch consultancy Ecofys insists the figure should be €44bn per year.

Whichever figure you choose, the gap between what the EIB is now doing on clean energy and what is needed to secure a rapid and deep energy revolution remains vast.

The EIB is, of course, just one of many institutions – states, businesses and other investors – that need to help fill the gap. But the EIB is one of the most important lenders to the energy sector in the world. And the EIB, as the EU’s bank, is a principal lever used by the EU in times of crisis: last December, the EIB committed itself to lending 30% more in both 2009 and in 2010 as part of the EU’s response to the economic crisis. The bank is therefore important both in practical, financial terms and as a symbol of the EU’s intent.

And, last week, the EIB did signal its intent to do more about green energy, with its president, Philippe Maystadt, pledging to deploy “the full arsenal of instruments and resources at our disposal to maximise the use of financial flows by our client partners” to change Europe’s energy mix and to support the UN’s efforts to curb climate change.

But the bank needs to do more than simply spend more. It needs to focus on clean energy much more aggressively, and it needs to recalibrate where it spends its money. To date, the EIB has acted as if there were two Europes. While western European countries have benefited from major renewable-energy and energy-efficiency initiatives funded by the EIB, it has offered eastern member states very meagre support. This is a startling oversight given the persistently high levels of energy wastage in the region’s industrial and domestic sectors.

The bank has the means to go some way to rectifying this, as it says it will lend central and eastern Europe an extra €2.5bn in both 2009 and 2010. Yet the publicly available data for this year suggest that clean-energy projects have not featured highly in its investment priorities in the region. Moreover, the efficacy of that funding is extremely difficult to gauge, as its loans to the region have been very heavily concentrated in lending to private banks for on-lending to small and medium-sized enterprises.

The EIB needs to pull out of fossil fuels, spend its billions exclusively on renewables and energy efficiency right across the EU (and beyond) and do so in a way that enables it to track the effectiveness of its loans. The EIB may have promised to direct a “full arsenal” of instruments to help the clean-energy revolution, but at the moment it is firing its arsenal erratically and, far too often, damagingly in climate terms.

Kateřina Husová is the climate co-ordinator at CEE Bankwatch, a network that monitors international development finance. She is the co-author of a new report entitled “Change the lending, not the climate: The European Investment Bank’s dirty energy tendencies are eclipsing its advances on clean energy – and undermining EU climate targets”.