Banks Urged to Reduce Fossil Fuel Infrastructure Financing

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António Guterres

The United Nations Secretary-General, António Guterres, has urged banks to finance low-carbon climate-resilient projects, not big fossil fuel infrastructure that are no longer cost-effective.

Speaking during a climate meeting, while praising the major economies that have committed to net-zero emission targets, Guterres stressed that under current commitments, the world was still headed to, “a disastrous temperature rise of 2.4 degrees by the end of the century.”

“We can no longer afford big fossil fuel infrastructure anywhere. Such investments simply deepen our predicament. They are not even cost-effective,” Guterres said in his speech at the 2021 Petersberg Climate Dialogue.

Fossil fuels have already become more expensive than renewable energy projects, the UN Secretary-General said.

“So we need the shareholders of multilateral development banks and development financial institutions to work with the management of these banks on funding a low-carbon, climate-resilient development that is aligned with the 1.5-degree goal,” he noted.

According to the UN chief, “We stand indeed at the edge of the abyss. But if we work together, we can avert the worst impacts of climate disruption and use the recovery from the COVID-19 pandemic to steer us on a cleaner, greener path.”

Meanwhile, the global banking industry has started heeding the call for a low-carbon energy sources funding.

Australia’s bank Macquarie said at the weekend that it had reduced its limited remaining equity and lending exposures to the coal sector, and all exposure to coal is expected to run off by 2024, in the latest pledge from a bank to stop financing certain fossil fuels.

Deutsche Bank said last year it was ending financing for new oil and gas projects in the oil sands and the Arctic region effective immediately.

In the United States, Goldman Sachs has said that it would decline to finance new Arctic oil exploration and production and new thermal coal mine development or strip mining.

In the same vein, Wells Fargo and JPMorgan have also said they would stop financing new oil and gas projects in the Arctic.