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COVID-19 recovery: Building back better, or bailing out fossils?

New guidance for finance institutions on aligning with the Paris Agreement
On September 16, a global network of 60 climate and rights groups, led by Rainforest Action Network (RAN), issued the Paris Principles (or, in full, the “Principles for Paris-Aligned Financial Institutions: Climate Impact, Fossil Fuels and Deforestation”), which offer a timely roadmap for the decarbonization of the finance sector to align with the Paris Agreement.

Writing in the Financial Times, Bill McKibben argues that as a result banks, asset managers and insurance companies “can no longer claim to not know what Paris alignment would mean.” It is imperative that these financial institutions implement these principles in their responses to the current crisis.

Public banks consider greener, more equitable role
Expectations are mounting for the Finance in Common summit, the first global meeting of the world’s 450 public finance banks, scheduled for 12 November 2020. Civil society organizations want these development banks to pledge at the summit to align with 1.5ºC, offer debt relief to Small Island Developing States, adopt rules to prevent unsustainable lending, provide more climate finance, and – critically – end all support for fossil fuel projects.

Saudi-led G20 backs fossil fuel bailouts
After a two-day virtual meeting, G20 energy ministers pledged this Monday to collaborate “to encourage dialogue to help mobilize public and private investment in various energy sectors”. Under Saudi leadership, the G20 statement not only rubber-stamped fossil fuel bailouts, but also failed to mention climate change or the group’s long-standing pledge to end fossil fuel subsidies.

Trends in the right direction

Denmark: USD 20 billion fund dumps 10 big oil and gas companies
Earlier in September, Denmark’s MP Pension fund announced that it would divest from 644 million kroner (USD 95 million) from ExxonMobil, BP, Chevron, PetroChina, Rosneft, Royal Dutch Shell, Sinopec, Total, Petrobras and Equinor. This was explicitly because of those companies’ failure to live up to the Paris Agreement.

Portugal cancels last two remaining fossil fuel extraction contracts
The last two fossil fuel extraction contracts in Portugal have been cancelled by the government. There is now no oil or gas drilling in the country. As recently as 2015, there were 15 extraction contracts, both onshore and offshore.

Fossil fuel workers call for a Just Transition
An opinion piece in the Guardian from a fossil fuel sector worker in the UK illustrated the growing movement among workers in the sector for a managed decline and just transition. The worker, who wrote under a pseudonym, states, “Jobs in oil and gas aren’t just at risk from economic shocks and fuel price fluctuation – we’re also in an industry that’s now in terminal decline. The writing is on the wall: fossil fuels are contributing to global heating and sea and air pollution, while green alternatives are cleaner and becoming cheaper to produce.”

Campaign news

Help stop the East African Crude Oil Pipeline (EACOP) Even now, in the middle of a global pandemic with oil demand in freefall, Total and the Chinese National Offshore Oil Corporation are working to begin a 1,443-kilometer crude oil pipeline through Uganda and Tanzania, EACOP. If built, this would be the world’s longest heated crude oil pipeline, driving peoples and communities from their homes, risking protected biodiversity hotspots, and threatening water sources. Sign and share the 350 Africa petition to to stop banks financing EACOP 

In September, Ugandan police also carried out a “preventive arrest” of six environmental activists and three journalists in connection to their opposition to this and other fossil fuel and polluting infrastructure projects. Two remained in custody, though others were released. Civil society organizations have united to demand their immediate release

Centre for Biological Diversity to sue California Governor Gavin Newsom
Last week, the Centre for Biological Diversity wrote to the California Governor to notify him of its intent to file a lawsuit to halt illegal permitting of oil and gas wells in the state. California’s government has issued more than 1,500 permits for new oil and gas wells in 2020. The Centre argues that these permits are illegal as they were issued without a review required by the California Environmental Quality Act.

Scientists challenge Australian government Chief Scientist over fossil gas

Professor Will Steffen and other leading Australian climate scientists have written to their government’s Chief Scientist, Dr Alan Finkel, challenging his support for fossil gas. They write:

«Unfortunately, that approach is not consistent with a safe climate nor, more specifically, with the Paris Agreement. There is no role for an expansion of the gas industry.

«The combustion of natural gas is now the fastest growing source of carbon dioxide to the atmosphere, the most important greenhouse gas driving climate change.”

This comes in the context of Australia’s government backing an unscientific, potentially catastrophic “gas led recovery” from the COVID-19 crisis.

Industry news

BP pledges cuts to oil and gas extraction
In August, BP announced that it will cut oil and gas extraction – excluding its major share in Russian oil giant Rosneft – by 40% by 2030. This is notable as the first from a big oil and gas company to recognize that significant reductions in oil and gas production must occur within this decade.

However, this announcement still appears to fall well short of the ambition required to limit global warming to 1.5ºC. In particular, by excluding its share of Rosneft from its commitment to decline production, BP is omitting almost 30 percent of the carbon pollution associated with its extraction investments in 2019.

Fossil fuel sector lobbying UK in advance of UN climate meetings next year
UK campaign group Culture Unstained exposed extensive lobbying by big oil and gas companies for a sponsorship role of the 2021 UN climate negotiations to be held in Glasgow next November. As Jess Worth told the Guardian: “Now the disturbing extent of big oil’s backchannel to the government has been revealed, the Cop unit must walk the walk and rule out sponsorship deals with the fossil fuel industry. If we’re going to meet the Paris climate goals, only urgent cuts in fossil fuel production will cut it – and that won’t happen if those determined to keep drilling are sponsoring the summit.”

Shell plans oil and gas exploration in Arctic offshore from Alaska 
For the first time since 2015, Shell plans to resume Alaskan Arctic offshore oil and exploration.

Texas CCS project “routinely missed its targets” before shut down
A report submitted to the US Department of Energy shows that the Petra Nova plant, a USD one billion project to capture carbon dioxide emissions from a coal power plant, “suffered chronic mechanical problems and routinely missed its targets” before being shut down. This was the only US project attempting to capture carbon from a coal plant.

Fossil fuel financing continues to rise – but there are positive signs 
In March, the annual Banking on Climate Change report produced by BankTrack and partners showed that fossil fuel financing from 35 global banks had risen to USD 736 bn in 2019. However, recent analysis by Energy Monitor suggests some reasons for hope: many banks and investors are encouraging companies to develop transition strategies and are investing capital in renewables, and banks in a number of countries have restructured or restricted their financing for the sector.

IEEFA has also released a tracker showing the progress in financial institutions divesting from oil, gas and coal.

BP and Shell still back lobby groups to block climate action
An investigation by Unearthed and HuffPost revealed this week that Shell and BP remain active members of at least eight industry organizations lobbying against climate action in the US and Australia. The companies failed to disclose these memberships in their annual reports.

In Canada, Environmental Defence have launched a campaign demanding that Shell dump the Canadian Association of Petroleum Producers (CAPP).

Report: British oil and gas rigs most polluting in North Sea
A new report shows that British oil and gas rigs in the North Sea emit 21kg of carbon dioxide for every barrel of oil produced.

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