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World Bank to Discontinue Support for Oil and Gas Projects

World Bank to Discontinue Support for Oil and Gas Projects

National Observer (Canada):

The World Bank has confirmed that it will stop financing upstream oil and gas projects after 2019 except under exceptional circumstances in the world’s poorest countries.

The global financial institution made the announcement at climate summit in Paris on Tuesday, which took place roughly two years after the historic COP21 climate conference in the same city.

At Tuesday’s summit, French insurance giant AXA announced that it will cease insuring the oilsands sector and new coal projects, and will divest more than US$3.5 billion from oilsands and coal companies. This includes divestment from energy giants TransCanada, Kinder Morgan and Enbridge, all of which have Canadian offices and are constructing major pipelines: Keystone XL, the Trans Mountain expansion and Line 3, respectively.

Several financially stable countries and multilateral institutions made important pledges to help developing countries meet their commitments under the 2009 Copenhagen Accord on climate action. That roadmap calls for the world to raise US$100-billion every year to help such countries meet their emissions goals by 2020. Last year however, the OECD estimated that only US$43 billion had been pledged, including $2.65 billion in funding from the Government of Canada by 2021.

The absence of the United States remained bittersweet and disappointing for most participants, including California Governor Jerry Brown and former United Nations secretary-general Ban Ki-moon, who talked about U.S. President Donald Trump’s “irresponsible” decision to withdraw from the Paris Agreement.

But former New York mayor and businessman Michael Bloomberg said he thought it had increased momentum.

“There isn’t anything Washington can do to stop us, quite the contrary, I think that President Trump has helped rally people who understand the problem to join forces and to actually do something rather than waiting for the federal government to do something,” Bloomberg said at a press conference.

More: World Bank won’t back oil and gas projects after 2019

 

 Source:  IEEFA

By: National Observer

LINK:  http://ieefa.org/world-bank-discontinue-support-oil-gas-projects/

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National Observer article:

World Bank won’t back oil and gas projects after 2019

The World Bank has confirmed that it will stop financing upstream oil and gas projects after 2019 except under exceptional circumstances in the world’s poorest countries.

The global financial institution made the announcement at climate summit in Paris on Tuesday, which took place roughly two years after the historic COP21 climate conference in the same city.

At Tuesday’s summit, French insurance giant AXA announced that it will cease insuring the oilsands sector and new coal projects, and will divest more than US$3.5 billion from oilsands and coal companies. This includes divestment from energy giants TransCanada, Kinder Morgan and Enbridge, all of which have Canadian offices and are constructing major pipelines: Keystone XL, the Trans Mountain expansion and Line 3, respectively.

The announcements were among highlights of a one-day “One Planet Summit” attended by about 50 world leaders and 2,000 participants, including Canada and Quebec environment ministers, environmental organizations, business officials and public figures such as actor Sean Penn.

The goal was to find financial solutions to phase out fossil fuel subsidies and allocate more money to help developing countries that will help their transition to low-carbon economies in the fight against climate change.

Need to reignite momentum

“We’re determined to work with all of you to put the right policies in place, get market forces moving in the right direction, put the money on the table, and accelerate action,” World Bank president Jim Young Kim told the closing plenary.

Conference co-organizers, including the Government of France, the World Bank and the United Nations, called in advance of the summit for “concrete action” to reignite momentum as the United States remains absent from the historic Paris Agreement on climate change. Reached in December 2015, the accord aims to keep global warming below 2°C this century.

“We are losing the battle,” French President Emmanuel Macron told participants. “The agreement has become fragile and we’re not going fast enough.”

Several financially stable countries and multilateral institutions made important pledges to help developing countries meet their commitments under the 2009 Copenhagen Accord on climate action. That roadmap calls for the world to raise US$100-billion every year to help such countries meet their emissions goals by 2020. Last year however, the OECD estimated that only US$43 billion had been pledged, including $2.65 billion in funding from the Government of Canada by 2021.

Quebec environment minister, Isabelle Melançon, Paris Summit
Quebec environment minister Isabelle Melançon speaks at a panel on public policies and environmental transition at a Paris summit on climate on Tues, December 12. Photo by Clothilde Goujard

The absence of the United States remained bittersweet and disappointing for most participants, including California Governor Jerry Brown and former United Nations secretary-general Ban Ki-moon, who talked about U.S. President Donald Trump’s “irresponsible” decision to withdraw from the Paris Agreement.

But former New York mayor and businessman Michael Bloomberg said he thought it had increased momentum.

“There isn’t anything Washington can do to stop us, quite the contrary, I think that President Trump has helped rally people who understand the problem to join forces and to actually do something rather than waiting for the federal government to do something,” Bloomberg said at a press conference.

Task force to help assess climate risks

Bloomberg and several other major economic leaders, including Bank of England governor Mark Carney, announced 237 companies worth more than $6.3 trillion had committed to participate in a wide-reaching Task Force on Climate-Related Financial Disclosures.

The task force aims to gather reliable data about the environmental metrics of its members, such as the carbon footprint of their operations.

According to the task force, only 20 per cent of major companies are currently reporting this kind of data. Bloomberg and his partners want to change that so CEOS, board members and shareholders can make informed decisions about their management practices and investment.

“Nobody would survive a board meeting where they said, ‘I don’t know that this risk is going to happen so let’s just sit around and do nothing,'” said Bloomberg.

One of the task force members is AXA, the world’s third largest insurance company.

Michael Bloomberg, finance, climate change
Michael Bloomberg speaks about a financial initiative to fight climate change at the One Planet Summit in Paris on Dec. 12, 2017. Photo by Clothilde Goujard

Canada to help ensure ‘just transitions’

Canadian Environment Minister Catherine McKenna was among the world leaders who said private sector involvement in climate financing is urgent in the race against environmental catastrophe.

“We need to be smarter about this. We have to stop the old school way of thinking where governments are going to take actions,” she said at a panel. “We’re missing a lot if we don’t leverage the private sector.”

Responding to McKenna’s comments however, Environmental Defense national program manager Dale Marshall emphasized that public financing will always be necessary.

“It’s really hard to leverage private sector dollars to do adaptation work and that’s really where governments need to step in with public money,” Marshall told National Observer.

Pembina Institute federal policy director Erin Flanagan made similar comments. National transitions to a low-carbon economy should be led by governments, she explained, and public policy must create a clear and assertive framework for the private sector, so it understands how it can support the green transition.

“If industry knows that the government is serious about achieving emissions neutrality by 2050, they will be less likely to build gas plants, they will be less likely to build new oil sands operations,” she told National Observer at the summit. “I think we still have a way to go at home to make sure that that consensus on the deadline is well developed.”

Meantime, McKenna unveiled a partnership with the World Bank to support developing countries’ transition away from traditional coal-fired electricity and toward clean energy. A press release said the parties would share best practices “on how to ensure a just transition for displaced workers and their communities.”

The partnership announcement came just as a Canadian and German environmental organizations released a report listing six Canadian financial companies among the world’s top 100 investors in new coal plants. Friends of the Earth and Urgenwald looked at the top 100 private investors putting money down to expand coal-fired electricity — sometimes in places where there isn’t any coal-generated power at the moment.

Together, Sun Life, Power Corporation, Caisse de depot et placement du Quebec, Royal Bank of Canada, Manulife Financial and the Canada Pension Plan Investment Board have pledged $2.9 billion towards building new coal plants overseas, the report said.

Urgewald tracks coal plants around the world and reports there are 1,600 new plants in development in 62 nations, more than a dozen of which don’t have any coal-fired plants now.

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More from Think Progress:

Major financial institutions rebuke the Trump agenda, announce big steps away from fossil fuels

Both public and private financial institutions are beginning to recognize the risks associated with investing in oil and coal.

Mining trucks carry loads of oil laden sand at the Albian Sands oils sands project in Ft. McMurray, Alberta, Canada. (CREDIT: AP Photo/Jeff McIntosh)

Mining trucks carry loads of oil laden sand at the Albian Sands oils sands project in Ft. McMurray, Alberta, Canada. (CREDIT: AP Photo/Jeff McIntosh)

Two major financial institutions — one public, one private — announced on Tuesday that they would be significantly paring down their investment in fossil fuel projects, signaling a shift in the way financial institutions assess the risks associated with fossil fuels and climate change.

During the One Planet Summit taking place in Paris, France this week, the World Bank announced that it would no longer finance upstream oil and gas — meaning any projects that involve oil and gas exploration or production — after 2019, making exceptions only for extreme cases. Because the World Bank already has a commitment in place restricting support for coal-fired power plans and thermal coal mining, Tuesday’s announcement essentially means that the World Bank will be cease financing of nearly all fossil fuel projects after 2019.

In a separate announcement, also made at the One Planet Summit, insurance giant Axa — which is based in France but does business all over the world — said that it would no longer invest in or insure tar sands projects or U.S. pipelines. Axa also said that it would quadruple its efforts to divest from companies that make at least 30 percent of their profits from coal.

“Both announcements signal a broader shift to the global finance community that the era of fossil fuels is ending and that there’s significant risk associated with investing in oil and coal, both reputational and financial,” Alex Doukas, director of Oil Change International’s Stop Funding Fossils program, told ThinkProgress. “The World Bank commitment, in particular, is really profound. No other public finance institution has taken a step that I think is this ambitious in facing its fossil fuel finance to date.”

Axa began divesting from coal in 2015, but on Tuesday committed to selling off more than $28 billion worth of investments in companies that derive more than a third of their revenue from coal. The company also announced that it would immediately stop insuring three major pipelines that carry tar sands fuel from Canada to refineries throughout North America, though it did not specifically name the pipelines that would no longer be insured through Axa. Major European banks BNP Paribas and ING also recently announced that they would divest from tar sands oil, which is one of the most carbon-intensive types of fuel. And in November, Norges Bank — the central bank of Norway — told the Norwegian government that it should divest its $1 trillion sovereign wealth fund, the largest in the world, of all oil and gas shares, which account for about 6 percent of the fund’s assets.

“I think there has been a real mainstreaming of concern about climate risk as a key financial risk,” Andrew Logan, director of oil and gas at the sustainability nonprofit organization Ceres, told ThinkProgress. “I think that’s leading different actors to take different steps, but all motivated by the same general concern.”

Doukas, who has worked with other climate activists to pressure the World Bank Group and its board of investors to move away from financing fossil fuels, characterized the World Bank move as even more significant than Axa’s divestment of coal and tar sands.

“The World Bank is really a thought leader on climate change, so for them to be taking this step really raises the bar for governments and institutions around the world,” Doukas said. “I am surprised at the breadth of this step that they have taken. It doesn’t touch all of their fossil fuel finance, but it’s a big step.”

Multilateral development banks — like the World Bank — provided more than $9 billion in public finance to fossil fuel projects in 2016, the year after nearly 200 nations agreed to hold the planet to well below 2°C (3.6°F) of warming in the Paris climate agreement. According to an October report by Oil Change International, the World Bank Group was one of the largest financiers of fossil fuels in 2016, investing some $4.7 billion in 2016. Doukas estimates that of that $4.7 billion, around $1 billion was invested in what would qualify as an upstream oil or gas project.

“It’s not trivial,” he said of the bank’s commitment. “It’s a pretty significant amount of finance that they are going to be moving.”

The announcements from Axa and World Bank come as the Trump administration has expressed interest in using multilaterial development banks to encourage the use of “clean coal” — which refers to expensive and non-commercially viable technology meant to capture the carbon emissions associated with the burning of coal — as well as oil and gas throughout the developing world.

In August, the Treasury Department rescinded an Obama-era guidance that made it more difficult for multilateral banks to finance coal operations overseas, instead issuing a guidance that directed the department to “help countries access and use fossil fuels more cleanly and efficiently.” At the most recent U.N. Climate Conference, held this year in Bonn, Germany, the United States’ only official event was a panel extolling the benefits of coal, nuclear, and natural gas as energy sources for the developing world. And the White House is reportedly launching an effort to boost U.S. coal abroad by forming an alliance between coal-reliant countries, like Indonesia, China, and India, and the United States.

But Tuesday’s announcements, Doukas counters, show that while the Trump administration might be focused on creating new opportunities for coal and natural gas abroad, public and private financial institutions seem to be walking back from fossil fuel investments rather than ratcheting up those commitments.

“What we’re seeing here is countries and public finance institutions and private finance institutions moving forward on climate action irrespective of what the Trump administration does,” Doukas said. “Even though the Trump administration can be damaging, their actions in this sphere are largely irrelevant.”

In the United States, several banks have faced divestment pressure over their financial support of fossil fuel projects, particularly tar sands pipelines. In the last year, a number of cities — including Seattle and Philadelphia — severed ties with Wells Fargo at least in part due the bank’s continued financing of the Dakota Access Pipeline. Wells Fargo currently has $14 billion invested in the oil and gas industry, according to the Sierra Club.

Investors and climate activists in the United States have also targeted fossil fuel companies themselves in an effort to get companies to recognize the risk that climate change poses to their financial assets. In a serious break from precedent, on Tuesday, ExxonMobil revealed in a filing to the Securities and Exchange Commission that it would be strengthening the disclosure of the risks its oil business faces from both climate change and climate policies.

“It’s interesting that these things happened at the same time,” Ceres’ Logan said of the World Bank announcement and the Exxon announcement. “I think they are separate instances driven by the same set of concerns. Taken together, they represent what could be a real tipping point in the investing community’s attitude towards fossil fuels as an investment. It’s another sign that the biggest investors in the world are really worried about climate change.”

 LINK:  read:https://thinkprogress.org/world-bank-axa-fossil-fuel-investments-70234906ffdf/
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