“The more banks finance fossil fuels, the less they help the economic system escape its dependence”

Lhe summary of scientific studies is very clear: respecting the 2015 Paris climate agreement and achieving carbon neutrality by 2050 (“net zero”) require leaving the majority of fossil fuels in the ground and not no longer open new deposits outside of those already in operation.

This observation is shared by the International Energy Agency (IEA)THE United Nations High Level Panel of Experts and the Intergovernmental Panel on Climate Change (IPCC). For the oil and gas sector, this means stopping the exploration and extraction of new fields as well as the development of new liquefied natural gas (LNG) infrastructure and gradually reducing production to achieve carbon neutrality in 2050.

These two corollaries imply urgent action on the supply of hydrocarbons, an essential lever to activate at the same time as reducing demand. They do not mean closing all fossil fuel infrastructures overnight, but rather taking note of the rapid and profound transformations that the transition requires.

For the reallocation of capital towards the ecological transition

Any delay considerably reduces the chances of avoiding the most serious consequences of climate change and on the contrary massively increases the human, as well as associated economic and financial, damage. The only fair and viable transformation is that which guarantees the reallocation of capital towards the ecological transition (renewable energies, efficient and comprehensive renovation of the real estate stock and structures of the urban environment, heat pump equipment, batteries allowing storage, economic circular, etc.) and prevents new investments from being locked into new oil and gas fields.

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Such projects are not only critical for our climate future, but also face major commercial and financial risks – lower profitability, early closure, stranded assets. According to the IEA, the oil and gas revenues of major producing economies could fall by 90% by 2050 in a 1.5°C scenario.

This plan weighs just as much on developing countries which are proposed to become new major hydrocarbon producers, and which could generate no real income. The market value of oil and gas companies themselves would decrease by 60% if efforts were made to limit warming to 1.5°C.

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