The EU has provided roughly €13.4 billion ($14.8 billion) in fossil fuel financing since 2013. Some EU members worry that ending such funding would enable Russian investment in countries like Ukraine and Croatia.
The EU's finance ministers on Friday urged the bloc's European Investment Bank (EIB), as well as other international lending institutions, to halt their funding for oil, gas and coal projects in a push to combat climate change.
The announcement came in a joint statement on Friday and is the first time finance ministers have taken such a stand.
To follow the directive, the 28-member EIB board would have to issue a formal decision. But the board had already considered voting on a phaseout of fossil fuel funding last month.
The vote, however, was postponed after divisions emerged within the bloc, with countries such as Germany, Italy and Poland rejecting it.
In their joint statement, the EU ministers urged the bloc and other institutions "to phase out financing of fossil fuel projects, in particular those using solid fossil fuels, taking into account the sustainable development, and energy needs, including energy security, of partner countries."
The EU has provided some €13.4 billion ($14.8 billion) in fossil fuel financing since 2013. Last year, these projects took up nearly €2 billion.
The EIB said its lending to energy projects focuses on "energy efficiency, renewable energy, energy networks, as well as related research and innovation.”
Confidential documents seen by Reuters news agency indicate that some exceptions might take place. Gas projects in Ukraine, Croatia and other EU partners could still receive funding, after Hungary pushed to obtain a waiver, raising concern that a ban on energy funding could push those countries to rely more on Russia.
The EIB board is set to hold a meeting on November 14, where a discussion on its fossil fuel investment will take place, EU officials have said.