Campaigners and NGOs have used the UN Climate Summit in Sharm el-Sheikh today, to urge insurers and financial services companies to take a stand against the growth in fossil fuel production.
Urgewald and 50 NGO partners have released the first update of the “Global Oil & Gas Exit List” (GOGEL). GOGEL is a public company-level database that covers 901 oil and gas companies, which account for 95% of global oil and gas production. Besides providing detailed information on companies’ conventional and unconventional hydrocarbon production, GOGEL allows users to “look into the future” by revealing companies’ upstream and midstream expansion plans.
“Since GOGEL was launched, over 20 European banks, insurers, and investors have published promising oil and gas policies. Eight of them publicly reference GOGEL,” said Katrin Ganswindt, fossil fuel finance campaigner at Urgewald. “But hundreds of financial institutions have yet to adopt strict, science-based exclusion criteria for oil and gas companies whose expansion plans are not in line with 1.5°C. GOGEL was designed to help investors, insurers and banks adopt impactful fossil fuel policies.”
Regine Richter, energy and finance campaigner at Urgewald said insurers were the front line of the fight against climate change:
“Insurers have to play their part in addressing climate chaos, both out of self-interest to avoid increasing damages and as actors with important leverage against the fossil fuel industry. GOGEL can help them live up to their responsibility and develop meaningful oil and gas policies,” she added. “Even the insurers that came up with advanced policies so far need to better tackle the company level by excluding new oil and gas field developers. Here is the tool to guide them.”
The campaigners said oil and gas companies are on a massive expansion course, 655 out of 685 upstream companies on GOGEL (96%) have expansion plans. Since 2021, the industry’s short-term expansion plans have increased by 20%. Currently, 512 oil and gas companies are taking active steps to bring 230 billion barrels of oil equivalent (bboe) of untapped resources into production before 2030. Producing and burning these resources will release approximately 115 Gt CO2eq into the atmosphere. This is 30 times as much as the EU’s annual greenhouse gas emissions. If the oil and gas industry simply maintained its 2021 production level of 56.3 bboe, it alone would exhaust our remaining carbon budget within 15.5 years.
They say GOGEL is the first tool that makes it possible to systematically assess whether a company’s activities are in line with the IEA NZE scenario. It analyzes companies’ expansion plans and determines the exact share of resources that “overshoot” the IEA scenario.
“The outcome of our calculations is truly frightening: 51.6% of oil and gas companies’ short-term expansion plans are not in line with the net zero emissions course put forward by the IEA,” explained Fiona Hauke, senior oil and gas researcher at Urgewald. “Keeping these oil and gas resources in the ground is the bare minimum of what is needed to keep 1.5°C attainable.”
The campaigners said last year’s COP 26 saw the launch of the Glasgow Financial Alliance for Net Zero (GFANZ).
“Despite its promise to speed up the finance industry’s commitments on reducing greenhouse gas emissions, the lion’s share of the alliance’s members has so far failed to introduce adequate oil and gas exclusion policies,” It added. “Handelsbanken, one of Scandinavia’s biggest banks, has been among the few financial institutions to follow up its GFANZ membership with concrete steps. It recently released an update on its environmental and climate change guideline. The guideline now excludes all oil and gas companies, which ‘aim to expand their extraction or are involved in the extraction of Arctic oil or gas, deep-sea extraction, oil sands, oil shale, heavy crude oil, shale oil, shale gas and extraction by fracking’.
“Only companies that stick to conventional oil and gas extraction methods and have a good transition plan can still receive financing.”
It added: “GFANZ, in fact, under pressure from major US banks, quietly dropped the requirement for its members to align with the UN Race to Zero Campaign. Nevertheless, at the time of writing, the GFANZ sectoral alliances of banks, insurers and investors all remained Race to Zero partners.”
“What counts here is not politics or financial interest but science. So, if any ‘net-zero’ or ‘1.5°C-aligned’ alliance or financial institution commits to the Race to Zero criteria but continues financing companies at the forefront of fossil fuel expansion, the credibility of its commitment shatters,” explained Lucie Pinson from the NGO Reclaim Finance. “A small but increasing number of major financial institutions are indicating that the days of fossil fuel dominance are numbered, and they are willing to end their finance for fossil expansion. Instead of seeking to appease the science-denying laggards, GFANZ needs to push its members to follow these leaders.”