Two European banks with global footprints pledged this week to stop financing new fossil fuel projects or placed heavy restrictions on them.
Crédit Agricole, France’s second-biggest bank, and the European Bank for Reconstruction and Development, a multilateral development bank, implemented the controls just days after the world’s nations agreed at the COP28 climate summit in Dubai to “transition away” from fossil fuels.
Europe ahead of other regions in cutting off fossil fuels
European lenders have far outpaced banks in the U.S. and Asia when it comes to cutting off fossil-fuel projects, showing a growing divide between Europe and the rest of the world, Semafor’s Prashant Rao writes: Of the top 10 “worst offenders” in last year’s Banking on Climate Chaos report, only one was in Europe. Still, even though activists acknowledged Crédit Agricole’s decision was a significant step, they argued it didn’t go far enough, particularly when compared to rivals such as HSBC and Societe Generale.
Why hasn’t there been a great shift toward green investments?
Analysts said it was notable that dozens of large banks have committed to net-zero emission targets, even as they continued to funnel hundreds of billions of dollars into the fossil fuel industry. While banks and governments say they want to move toward Net Zero, political and economic factors can sometimes get in the way of that, The Banker reported. A Canadian bank executive predicted that financing will really start to shift in 2030, and a commodities expert at a Japanese bank told the magazine that right now, the “green ‘new economy’ revolution is too nascent … to drive global growth.”
Demand for fossil fuels continues to rise globally
According to a new International Energy Agency report, global coal use will hit a record this year, and oil demand continues to rise, though “evidence of a slowdown in oil demand is mounting.” The IEA previously said it expects fossil fuel demand to peak by 2030. Meanwhile, Brazil — which is hosting the COP summit in the Amazon in two years — faced criticism this week for auctioning off over 600 lots for oil and gas exploration to private companies. Environmentalists called it “the auction of the end of the world.”