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[en] In May 2020, Reclaim Finance publishes a report revealing that the European Central Bank's corporate asset purchases significantly finances all fossil fuels. based on its study of the ECB's list of corporate holdings (CSPP and PEPP), Reclaim Finance shows that quantitative easing strongly benefits to firms from the most polluting sectors (fossil fuels, air and automobile sectors...). Titled 'Quantitative easing and climate: The ECB's dirty secret', the report shows that the principle of market neutrality leads the ECB to support companies, which because of their massive activities in the fossil fuel sector, are a stumbling block for the EU to achieve its own climate targets. Reclaim Finance calls on Christine Lagarde and the Eurosystem governors to put an end to asset purchases of fossil fuel companies. The main points of the report: For several years, and even more today in the context of the Covid-19 crisis, the ECB massively uses quantitative easing to fulfill its missions. With the Eurosystem banks, it held 2783 billion euros in assets at the end of March 2020 and planned on buying 1100 billion in a single year. 63% of the ECB's corporate asset purchases go to high-carbon emitters, and the asset purchases decided in response to the Covid-19 pandemic alone could finance high-carbon emitters to up to 132 billion, therefore crushing hopes for a 'green recovery'. The ECB bought assets from 38 fossil fuel corporations. Of these corporations, 10 are active in the coal sector for a total installed power capacity of 66 000 MW, more than all of the French nuclear reactors. Major oil and gas companies, including Shell and Total, that plan on increasing their productions respectively by 38% and 12% from 2018 to 2030, are on the list of assets bought by the ECB. Shell's case is especially problematic. It is one of the 4 enterprises of the ECB's portfolio active in shale oil and gas and could multiply its production in the area by 12. In May 2020, Reclaim Finance publishes a report revealing that the European Central Bank's corporate asset purchases significantly finances all fossil fuels. Four months later, the NGO reveals in a new memo that companies supported by the ECB greatly contribute to fossil gas expansion in Europe and worldwide. Titled 'Quantitative easing and climate 2: Fueling the fossil gas frenzy', the document shows that the ECB's asset purchase lock us in a fossil dependent world by supporting companies that greatly contribute to the expansion of the fossil gas sector. Reclaim Finance calls on Christine Lagarde and the Eurosystem governors to put an end to asset purchases of fossil fuel companies. The NGO underlines doing so in a few years would mean favoring the continuous development of the fossil gas sector. The main points of the report: The ECB's quantitative easing supports 24 gas companies operating 123 gas power plants, extracting gas from 48 sites in Europe, and operating 96 gas pipelines and 97 LNG (Liquefied Natural Gas) terminals worldwide. Companies supported by ECB purchases plan on building 62 new gas infrastructures, with 4 companies responsible for 45 projects: Total, Shell, Engie and Enel. Total and Shell alone are developing 36 projects.
[fr]Ce rapport etudie la liste des actifs detenus par la BCE au titre des achats d'actifs d'entreprises (CSPP et PEPP) et montre que le quantitative easing beneficie aujourd'hui fortement aux entreprises des secteurs les plus polluants (energies fossiles, aerien, automobile...). Le BCE a achete les titres de 38 entreprises des energies fossiles. Parmi elles, 10 entreprises sont liees au secteur du charbon, pour une puissance totale installee d'environ 66 000 MW, soit plus que l'ensemble des reacteurs nucleaires francais en service. Le charbon n'est pas le seul probleme: des majors petrolieres et gazieres, dont Shell et Total, qui prevoient d'accroitre leurs productions de 38 et 12% de 2018 a 2030, figurent dans la liste des titres achetes au titre du CSPP et PEPP. Shell prevoit meme d'exploiter des reserves de petrole et gaz de schiste atteignant 12 fois sa production actuelle dans le domaine. Au-dela des energies fossiles, le portefeuille de la BCE fait la part belle aux activites a forte intensite carbone. 63% des actifs achetes seraient ceux d'entreprises polluantes, soit jusqu'a 132 milliards de financements polluants pour les seuls rachats lances en reponse a la crise du Covid-19. Une semaine avant la reunion des gouverneurs de la BCE du 10 septembre 2020, les nouvelles recherches de Reclaim Finance montrent qu'attendre 2022 pour conditionner le quantitative easing nous enferme dans un monde dependant au gaz naturel. En effet, les 1700 milliards d'euros d'actifs achetes par la BCE en 2020-2021 continueront a soutenir la croissance du secteur gazier et de ses grands developpeurs de projets.
[en] A new report from Reclaim Finance and seven partner NGOs reveals that the Powering Past Coal Alliance (PPCA) has failed to trigger a wide coal exit movement. The analysis of the progress of the 111 PPCA members shows that many of them are failing to phase out coal support. Among these members, financial institutions stand out since the vast majority continue to finance coal. Created in 2017, the PPCA has grown rapidly, bringing together states, local governments, financial institutions, and companies. However, while some of its members are planning to shut down their power plants in line with the Paris Agreement - i.e. by 2030 in the EU and OECD and 2040 worldwide - others have put this ambition on hold. In fact, only 2 out of the 23 financial institutions in the alliance have adopted a policy that would allow them to exit coal within these time frames. In contrast, 18 - including Aviva, L and G, CalPERS and Swiss Re - do not restrict funding to companies developing new projects and 8 - including Schroders - have no minimum criteria limiting their support to the sector. The PPCA's financial members are found to have $38 billion invested in companies significantly involved in the coal sector. Moreover, the report points out that the foundation of the alliance - the PPCA declaration and Finance Principles - itself contained major loopholes that allow its members to satisfy its criteria while remaining important players in the coal sector. The limits of the initiative also stem from the behavior of certain member states, including its co-chairs Canada and the United Kingdom. Indeed, while Canada will close all its power plants by 2030, it is increasing its coal exports and plans to open 13 new mines in Alberta and British Columbia, two regions that are also individual members of the Alliance. On the other side, the United Kingdom is considering the development of a new coal mine. Similarly, Mexico is planning to open new coal-fired power plants, Germany will continue to use them until 2038 and Senegal did not adopt any phase-out date. The report presents recommendations for the PPCA to achieve its objective of becoming a vehicle for a global exit from coal. The PPCA must demand that its members exit the entire coal sector - including mines and infrastructure - to consider the specificities of financial actors. Its members need to align with a coal exit timetable compatible with the Paris Agreement, which means for financial institutions adopting coal exit policies following the Coal Policy Tool criteria.
[en] The new Sustainable Taxonomy aims at identifying activities that contribute to the ecological transition, in accordance with European climate and environmental objectives. While the eagerly awaited regulation is almost operational and received the European Parliament's approval, the European Commission is considering the reintegration of natural gas and nuclear energy in the taxonomy. Looking closely at the chronology of events and at the European transparency register, Reclaim Finance sheds a light on the intense gas and nuclear lobbying that led to these dangerous last-minute discussions. Key findings: - It took two years of work to exclude fossil gas and nuclear from the new European sustainable taxonomy. Now, backdoor dealings and special procedures could lead to their integration. - 189 players from the fossil gas and nuclear sector mobilize 825 lobbyists -450 full-time equivalents (FTE)- to put pressure on the European Commission. They are spending between Euros 71.4 million and Euros 86.6 million a year to influence EU decisions. This is a conservative estimate as the EU transparency register is voluntary and non-binding, thus allowing unreported and under-reported lobbying. - The European Commission largely listens to fossil gas and nuclear lobbyists. Between January 2018 and July 7, 2020, EU officials held 310 meetings, 52 between the publication of the final report on the taxonomy in March 2020 and July 7, 2020. Since the taxonomy process started, in 2018, they had 2.36 meetings a week with them. The frequency of these meetings slightly increased after the last report was published in March 2020 from 2.28 to 2.86 times a week. - The fossil gas lobby is especially vast and powerful. It gathers 167 entities that spend between Euros 68.8 million and Euros 82.9 million each year and devotes 759 employees-419 FTEs-to promoting the sector as a 'bridge' energy.
[en] This publication first proposes an overview of the presence of the French financial sector in the fossil energy sector: position of European leader of fossil energies, at a crossroad with respect to the coal sector, commitment in non conventional gases without taking the government's instructions into account. After having recalled the watchword to leave fossil energies behind, it outlines that the expansion plans of the oil and gas industry are going against climate science. It finally outlines the necessity to make the way out of fossil energies an obligation and not an option for the financial sector, and proposes four rules for a credible phasing out oil and gas
[en] In 2020, Total produced 447 units of fossil fuels for every 1 unit of renewable energy. Nonetheless, despite its desire to rename itself Total Energies, the major continues to invest heavily in the development of new fossil energy projects, such as the highly controversial EACOP oil project such as the highly controversial EACOP oil project in Uganda and Tanzania, or in the Arctic. 90% of its capital expenditure remains oriented towards fossil fuels and the trends in its hydrocarbon production could result in an increase of more than 50% between 2015 and 2030. Thus, the way French financial players are adapting their relationship with Total SE, in a context of climate emergency, is a good indicator of the sincerity of their commitments, and of the challenges related to their success. This briefing takes stock of Total SE's climate promises and of the way financial players have treated such a heavyweight in the energy sector until now. It also sketches out possible courses of action. The first follows a global approach that extends across the entirety of financial actors' portfolios and the companies they support. The second follows a sector-based approach aimed at finding immediate solutions for the most polluting sectors, which also turn out to involve the heaviest ESG and financial risks. For an oil and gas company, these are unconventional hydrocarbons - shale gas and oil, oil sands and drilling in the Arctic and deep waters. While acting on the first axis will only end up having an impact after several years, targeting the most polluting sectors makes it possible to meet the scientific imperative of reducing our greenhouse gas emissions by 7.6% every year until 20301. The actions to be taken on both axes must of course be based on science, which stipulates that oil production must be reduced by 4% and gas production by 3% per year by 2030 in order to meet the 1.5 deg. C objective.
[fr]En 2020, Total a produit 447 unites d'energies fossiles pour 1 d'energies renouvelables. Or malgre sa volonte de se renommer TotalEnergies, la major continue d'investir massivement dans le developpement de nouveaux projets d'energies fossiles, comme le tres controverse projet petrolier d'EACOP entre l'Ouganda et la Tanzanie, ou des projets d'energies fossiles en Arctique. 90% de ses depenses d'investissements demeurent orientees vers les energies fossiles et l'evolution de sa production d'hydrocarbures nous amene vers une augmentation de plus de 50% de cette derniere entre 2015 et 2030. Ainsi, la maniere dont les acteurs financiers francais adaptent leur relation a Total SE dans un contexte d'urgence climatique est un bon indicateur de la sincerite de leurs engagements precites, et des defis lies a leur succes. Ce briefing analyse les promesses climatiques du groupe, ainsi que la maniere dont les acteurs financiers ont jusqu'a present traite un tel poids lourd du secteur energetique. Il presente enfin les pistes d'actions possibles. Le premier suit une approche globale qui couvre l'integralite des portefeuilles des acteurs financiers et des entreprises qu'ils soutiennent. Le deuxieme suit une approche sectorielle visant a trouver des solutions immediates pour les secteurs les plus polluants, lesquels s'averent concentrer aussi les plus lourds risques ESG et financiers. Pour une entreprise gaziere et petroliere, il s'agit des hydrocarbures non conventionnels - gaz et petrole de schiste, sables bitumineux et forages en Arctique et en eaux tres profondes. Alors qu'agir sur le premier axe ne pourra produire des impacts qu'au bout de quelques annees, viser les secteurs les plus polluants permet de repondre a l'imperatif scientifique de baisser tous les ans nos emissions de gaz a effet de serre de 7,6% jusqu'en 20301. Les actions a mener sur les deux axes doivent bien entendu etre fondees sur la science, laquelle stipule qu'il faut baisser de 4% la production petroliere et de 3% la production gaziere par an d'ici 2030 afin de tenir l'objectif de 1,5 deg. C.
[en] To limit climate breakdown, we must sharply reduce and eventually end all extraction and use of fossil fuels. Any delay considerably lowers our chances of limiting global warming to 1.5 deg. C, or a maximum of 2 deg. C - increasing human, social, economic and financial impacts. The timeline to transition towards a low-carbon world is therefore of the utmost importance. In this context, the 'transition risk' associated with the speed of phasing out fossil assets constitutes a real challenge. Indeed, ending our addiction to fossil fuels will eventually lead financial assets tied to fossil fuels to lose all market value. This report suggests that a conservative estimate of losses caused by these stranded assets would represent Euros 500 billion for the 11 largest banks in the eurozone, representing 95% of their equity on average. These figures will continue to increase if banks further develop their exposure to fossil fuels, as some seem determined to do. If public authorities and financial regulators do not act, the banking sector may feel it is 'urgent to wait' to decarbonize. But the planet and humanity cannot wait. Nor can the financial system, which increases the risk of a subprime-like crisis. In view of this threat, the first urgent step is to change the rules of the game for financial institutions, to prevent any new investment in coal, oil and gas, and stop the development of new fossil metastases. This requires ending monetary policies' current support to fossil fuels, and reviewing national and European regulations to force banks to align their operations with the objectives of the Paris Agreement. To ensure stocks of fossil assets and the transition risk weighing over them do not reduce the ability of our economies' to initiate the ecological reconstruction, it is crucial to find ways to stop the growth of these assets in banks' balance sheets. Creating a bad bank to rid banks of these assets is a first idea, and one the banking sector will probably come to support eventually. We must be cautious, however, in determining who will foot the bill and bear the financial cost of the loss of value of fossil assets. Without innovative solutions, it would likely be taxpayers, once again. Our proposal is therefore that banks partly cover losses themselves, with the European Central Bank covering the remaining, largest share. Our purpose is not to feed the illusion that a single actor, be it the ECB, could solve the challenge posed by the transition risk and stocks of fossil assets alone. We deliberately focused our analysis on this aspect of the issue, which is closely linked to the physical risk climate change poses for our societies and economies, including banks, insurance companies and the real economy. Many additional measures are necessary to tackle this complex systemic problem. Our proposal is therefore modest, but it may enable the emergence of a real democratic debate on ways to tackle ecological challenges in the next decades, without letting taxpayers suffer massive environmental and social harm while footing the bill