World Bank, major businesses and nations unite against coal funding
The One Planet Summit in Paris has signalled the beginning of the end for the coal industry, after the World Bank, numerous financial institutions and a group of nations and major businesses all pledged to phase out fossil fuel funding and use.
The World Bank revealed that is will end financial support for oil and gas exploration by 2019, although exceptional cases may allow for funding of certain projects in developing countries where people rely on fossil fuels for energy.
Notably, the Bank announced that its was set to have more than a quarter of its lending portfolio go towards climate action projects by 2020. The World Bank had stopped lending for coal-fired power stations in 2010, but more than £750m a year is still being funnelled into fossil fuel projects in developing countries. Currently, around 2% of the World Bank’s portfolio is spent on oil and gas.
The World Bank has previously criticised what it believes are "grossly misrepresented" findings from the Bank Information Center (BIC), which claimed that up to $5bn in intended low-carbon funds have instead been used to introduce tax breaks for fossil fuel developments in developing countries.
Earlier this year, the Bank issued its first ever set of green bonds that directly link financial returns to companies performing to the standards and aims on the United Nation's Sustainable Development Goals (SDGs).
Powering Past Coal Alliance
The World Bank announcement was the headline act in a flurry of emerging news stories, all of which suggest that nations – apart from the US – and businesses are united in accelerating the phase-out of fossil fuels.
Last month, the UK and Canada launched the Powering Past Coal Alliance, which commits members to power operations and grids without the use of fossil fuels. At the One Planet Summit in Paris, the Alliance announced that it had doubled in size, after Sweden and California joined 24 corporates in pledging to the initiative.
Corporate giants such as Unilever, Marks & Spencer, Salesforce and Virgin were among the 24 business signatories to the Alliance, which hopes the actions of its members will push the global economy towards the targets of the Paris Agreement.
"I'm thrilled to see so many business leaders commit today to moving away from a source of power that is choking cities and causing close to a million premature deaths per year,” Canada’s Minister of Environment and Climate Change Catherine McKenna said.
Original members to the Alliance include France, Mexico, Angola and the states of Washington and Oregon. Governments of Ethiopia, Latvia, Liechtenstein, Tuvalu and Vanuatu have also joined the Alliance this week, which has a combined wealth of more than $170bn.
The Canadian Government will launch an expert taskforce in 2018 to help nations and businesses transition away from fossil fuel use.
ING, AXA and coal’s SOS
Commercial banks are also igniting signals that funding for fossil fuels with soon be a thing of the past. Earlier this week, insurance giant AXA revealed that it was quadrupling a 2020 green investment goal to €12bn.
AXA also pledged to increase coal divestments fivefold, by moving more than €2.4bn away from companies that generate up to 30% of revenue from coal, actively build new coal capacity, produce more than 20 million tonnes of coal annually or have an energy mix derived of more than 30% fossil fuel.
"We have made some pioneering moves since 2015, notably by starting to divest from coal, setting an ambitious green investments target, and restricting our insurance business with the coal industry," AXA’s chief executive Thomas Buberl said. "Today, in the spirit of the Paris Agreement, we want to accelerate our commitment and confirm our leadership in the fight against global warming."
As part of the announcement, AXA also revealed future plans to divest more than €700m away from oil sand producers and any associated pipelines.
In related news, Dutch bank ING used the One Planet Summit to increase the speed of scope for its divestment plans. ING announced that it will reduce its exposure to coal power generation to “close to zero” by 2025.
“We realise that contributing to the Paris Agreement targets is also about making clear choices in what we’ll no longer finance, especially when there are good alternatives available,” ING’s vice chairman Koos Timmermans said. “We are taking this decisive step as part of our overall ambition to support the energy transition.”
By 2025, ING will no longer finance utility firms that have more than a 5% reliance on coal in their energy mix. However, the bank will continue to finance non-coal projects for these clients. Any new utility clients wishing to partner with ING will – as of today – need to have a less than 10% reliance on coal and have plans in place to reduce that figure to close to zero by 2025.
It’s been a busy end to the year for ING, which spent much of the last two months calling on companies to create better management and disclosure measures on water consumption.
Paris Collaborative on Green Budgeting
The One Planet Summit saw the European Commission unveil a €9bn funding pot for action on climate change, while the OECD launched a joint initiative with Mexico and France to create new measures to match national budget calculations with the targets of the Paris Agreement.
The Paris Collaborative on Green Budgeting scheme will help government embed climate and environmental commitments into budgeting and policy frameworks.
"Our success meeting the objectives of the Paris Agreement and the Sustainable Development Goals more broadly will require bold, collective and decisive action to make the 'one planet' we have a greener, cleaner and more sustainable place," OECD’s secretary general Angel Gurria said.
"The Paris Collaborative on Green Budgeting goes precisely in this direction by contributing to a step-change in how governments think and act in their budgetary process in order to address this defining challenge of our age."