{"id":4113,"date":"2019-09-03T11:18:18","date_gmt":"2019-09-03T11:18:18","guid":{"rendered":"http:\/\/euromenaenergy.com\/?p=4113"},"modified":"2019-09-03T11:18:18","modified_gmt":"2019-09-03T11:18:18","slug":"the-slow-greening-of-finance","status":"publish","type":"post","link":"https:\/\/emimer.com\/?p=4113","title":{"rendered":"The Slow Greening of Finance"},"content":{"rendered":"<p><time class=\"vl-divider\" datetime=\"2019-08-28T13:59Z\">Aug 28, 2019<\/time>\u00a0<span class=\"byline\"><span class=\"listing__author author\">ANDREW HIGHAM<\/span><\/span><\/p>\n<div class=\"article__abs u-mt-se\" dir=\"ltr\">\n<p>Although the world is not reducing greenhouse-gas emissions to the extent needed to limit catastrophic global warming, major financial players are finally starting to make the shift away from fossil fuels. With recent divestment decisions now rippling across economies, hope of achieving a carbon-free energy future is not lost.<\/p>\n<\/div>\n<div class=\"article__body article__body--commentary english\" dir=\"ltr\" data-page-area=\"article-body\">\n<p data-line-id=\"7648b8fd97ae4ffc95fe3dfded650c6c\">OXFORD \u2013 Some of the most influential players in the global economy are spearheading the shift toward a clean, green, emissions-free world, even while key governments stand idle. Financial giants from Europe, China, Japan, the United States, Australia, and elsewhere can see the looming risks and rewards, and they are not waiting on policymakers to signal what needs to be done. By setting immediate bans on new fossil-fuel investments, labeling clean and dirty energy producers, and dumping unappealing stocks, the financial industry is redirecting huge flows of money from fossil fuels to low-carbon technology.<\/p>\n<p data-line-id=\"bf01809f56454294aa159fc4b7d3d607\">Such decisions can ripple across economies. Consider, for example, the split between state and private energy finance in India. According to the Delhi-based\u00a0Centre for Financial Accountability, primary finance for coal-fired power plants dropped by 93% between 2017 and 2018, while finance for renewables rose by 10%. Among the loans for coal projects in 2018, most came from government-controlled financial institutions, whereas three-quarters of renewables financing came from private commercial banks.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"2a703673e7104936bbc1b58a67cf28ff\">Similarly, banks and traders in Japan are abandoning coal projects in favor of renewables, even though the government has resisted setting a phase-out date for coal-powered energy. Three Japanese coal-plant projects have been canceled or delayed this year. And at the global level, the International Energy Agency (IEA)\u00a0reports\u00a0that investments in coal-power plants hit a century low in 2018, while more coal generators were retired.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"0517e3e40b094f7a866385311055b794\">This trend will become more pronounced as the\u00a0number of financial firms shifting from fossil fuels continues to grow. Consider the headlines since March. Norway\u2019s sovereign wealth fund has won parliamentary approval to divest $13 billion from fossil-fuel stocks, as part of the largest\u00a0fossil-fuel selloff\u00a0to date. Japan\u2019s Mitsubishi UFJ Financial Group, one of the world\u2019s largest banks in terms of assets,\u00a0ceased financing\u00a0new coal-fired power projects. And Chubb became the first major US insurer to\u00a0announce\u00a0a ban on coal coverage, while Suncorpbecame the last Australian insurer to\u00a0end coverage\u00a0for new coal-mining and coal-power projects.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"b0efbab8614b4ec6add74e8e73df7036\">Moreover, the London Stock Exchange has recategorized oil and gas stocks as \u201cnon-renewable energy\u201d and classified green-energy stocks as \u201crenewable\u201d instead of \u201calternative.\u201d And the world\u2019s largest investor in overseas coal projects, the Oversea-Chinese Banking Corporation, said it would\u00a0end financing for coal-power plants (once it finishes two final projects in Vietnam), while China\u2019s State Development &amp; Investment Corporation announced plans to\u00a0stop investing\u00a0in new coal-fired plants and focus on new energy sources.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"f221852c84c34524bfc365fc9a73bbae\">More broadly, the\u00a0Investor Agenda\u00a0for a low-carbon world has attracted 477 signatories, representing around $34 trillion in assets under management. These investors are\u00a0calling on governments\u00a0not just to limit rising temperatures, but also to meet the Paris climate agreement\u2019s more difficult goal of limiting global warming to 1.5\u00b0C above pre-industrial levels.<\/p>\n<p data-line-id=\"1e203c31540a4fe9af9aad0f7b6d417d\">Meanwhile, the Institute for Energy Economics and Financial Analysis has found that those who ignored climate-change warnings have already taken a financial hit. BlackRock, the world\u2019s largest fund manager,\u00a0lost\u00a0around $90 billion over the last decade, three-quarters of which was due to its holdings in ExxonMobil, Chevron, Shell, and BP. And investors in\u00a0General Electric, including BlackRock, lost a whopping $193 billion in the three years leading up to 2018, because the company misjudged the pace of the shift to green energy and the collapse in demand for gas turbines and thermal power stations.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"7d7fb446564446edb23c89d44546f036\">Although the shift away from fossil fuels is already monumental, a potential tsunami awaits. Those divesting from fossil fuels are the early adopters who have sensed a change in wind direction and readjusted their sails. But far more needs to be done. Because those firms\u2019 competitors have yet to take any steps toward divestment, trillions of dollars in carbon assets remain on investors\u2019 balance sheets.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"21cffa14b6204a978a91bd0950c3c8d5\">Moreover, according to the IEA, while coal investments have fallen, capital spending on oil, gas, and coal nonetheless bounced back in 2018, and investment in energy efficiency and renewables stalled. Worse, the consultancy Wood Mackenzie\u00a0finds\u00a0that the renewables boom has translated into only 2% of global energy demand. As matters stand, coal, oil, and gas could still supply 85% of primary energy by 2040, down only slightly from 90% today.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"3160bd5338ee45f3b75b76938cf593c9\">To complete the transition away from fossil fuels will require drilling down to the core of the global economy. It does not help that financial institutions in China\u00a0funneled\u00a0at least $1 billion in \u201cgreen\u201d financing to coal-related projects in the first half of this year. Companies cannot keep producing oil, gas, and internal combustion engines while gradually shifting to cleaner technologies; they need to make a clean break.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"612af9ba783d46debf5b224451a35efe\">Moreover, financiers need to look beyond coal and withdraw support for all fossil fuels. Equally important, governments must set an ambitious trajectory for their economies that impels adherence to the 1.5\u00b0C limit on warming. Our current path will lead to warming of 3\u00b0C or more, which would have catastrophic consequences.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"001a286b6a69439789055c7dc59a81d6\">The United Nations Climate Action Summit on September 23 offers the opportunity for financial institutions and governments to do what is necessary. Secretary-General\u00a0Ant\u00f3nio Guterres\u00a0has called for gold-standard leadership, in the form of government and private-sector commitments to slash emissions to net zero, with interim targets every five years.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"9ccd5014c6064d5e8139d8e4481b9c75\">Guterres\u2019s call to action is echoed by all who have been demonstrating and striking for the same goal. Investors need to rise to the occasion, by structuring portfolios in such a way as to achieve net-zero emissions by 2050. That means pushing the companies in their portfolios to change, too, or risk being cut off and left behind. But setting long-term aspirations won\u2019t be enough. Actionable steps for the coming months and years must accompany the commitments made today, to ensure that progress remains on track.<button class=\"comment__caller comment__caller--no-comment\" aria-expanded=\"false\" aria-label=\"Paragraph comment\" aria-controls=\"login_register\" aria-haspopup=\"true\"><\/button><\/p>\n<p data-line-id=\"3358b4ec0f7f45e09f5ed02c455f1478\">To that end, Mission 2020 is collecting stories of progress from across the global economy. Our\u00a02020 Climate Progress Tracker Tool, an open-access database, is updated regularly with climate commitments by countries, businesses, cities, and others. The bigger the divestment movement grows, the harder it will be to hide in the shadows, clinging to the past.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Aug 28, 2019\u00a0ANDREW HIGHAM Although the world is not reducing greenhouse-gas emissions to the extent needed to limit catastrophic global warming, major financial players are finally starting to make the shift away&#8230;<\/p>\n","protected":false},"author":1,"featured_media":4131,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17],"tags":[46,48,57,68,76,77,82,86,87,90,96,99,103,107,109,111,113,137,139,146,148,160,174,183,184,201,202,209,222,230,232,233,244,246,249,256,262,263,267,277,279,280,285,288],"class_list":["post-4113","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-aramco","tag-athens","tag-baroudi","tag-carbon","tag-climate","tag-climate-change","tag-co2","tag-cyprus","tag-decarbonising","tag-democracy","tag-doha","tag-eastmed","tag-egypt","tag-embargo","tag-emissions","tag-energy","tag-energy-peace","tag-gas","tag-gazprom","tag-greece","tag-greenenergy","tag-international-maritime-disputes","tag-lebanon","tag-maritime-boundaries-east-mediterranean","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-pollution","tag-poverty-alleviation","tag-putin","tag-qatar","tag-rosneft","tag-roudi","tag-russia","tag-saudi","tag-solar","tag-solar-power","tag-straddling-hydrocarbons-reserves","tag-total","tag-trump","tag-turkey","tag-unclos","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/4113","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4113"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/4113\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/4131"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}