Saturday

2nd Mar 2024

EU apathetic on fossil fuel divestment

  • A divestment protest in Oxfordshire in February 2015. The EU, however, barely has the issue on its radar (Photo: Kamyar Adl)

The total value of pledges to remove investments from the fossil fuel industry has increased 50 fold in the past year, but supporters of this so-called "divestment movement" are having difficulty putting the topic on the agenda in Brussels.

According to a report published on Tuesday (22 September), the combined promises to divest from fossil fuel add up to $2.6 trillion, or around €2.3 trillion.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Norway's €791 billion pension fund, Sweden's Nordea Bank, and Oxford City Council are among those having announced commitments.

There are two main reasons those pledging have divested from fossil fuels (and often reinvested that money in renewable energy projects).

The first is a moral or ethical argument, which appeals to citizens and organisations that do not want to be a part of, say, a pension fund or university which invests in the fossil fuel industry.

The greenhouse gas emissions from fossil fuels have contributed to climate change, and increasingly people are thinking about their financial carbon footprint.

The second argument is purely economic, as became evident at the International Divestment Conference in Paris, earlier this month, organised by the European Greens, in particular German MEP Reinhard Bütikofer.

Olivier Rousseau of the French pensions reserve fund noted that, although change at his fund would not happen "overnight", climate change has become a factor.

"We have identified carbon as a risk for us institutional investors", he told the audience.

Carbon bubble

The reasoning behind this involves the concept of the "carbon bubble".

Climate scientists have determined that if we are to limit global warming to no more than 2 degrees Celsius – a threshold above which irreversible changes to the planet are likely – there will be a limit to the amount of fossil fuels that can be burnt.

Politicians have adopted the 2-degree limit, and have come out this year with statements referring to a phase-out of fossil fuels. In an historic announcement last Summer, the G7 said the world should be decarbonised by 2100. Last Friday (18 September) EU environment ministers also embraced that long-term target.

That may mean that unless the fossil fuel industry finds a way to prevent greenhouse gas emissions, their industry will cease to exist. At the very least, large parts of the oil, gas, and coal companies' reserves would be unburnable, and hence valueless.

Calculations by HSBC and McKinsey showed that somewhere between 30 to 60 percent of the share value of fossil fuel companies could be lost.

At the Paris conference, former French development minister Pascal Canfin noted that credit rating agency Standard & Poors has started to assess climate risk exposure when they rate companies and countries.

Canfin, who was an MEP for the Greens until 2012, recalled that four years ago his group had tried in vain to include a mandatory climate assessment in new EU rules for credit rating agencies.

"It illustrates the huge shifts in the cultural battle we are in", he noted. "In four years what the politicians left and right were not able or brave enough to impose, on a voluntary basis the financial industry is starting to move on," he said.

Not (yet?) on the agenda

However, the issues of carbon bubble and divestment have not yet found their way to the top of the political agenda in Brussels.

An informal group of MEPs from five different political groups has been trying over the past months to put the issue on the agenda for a plenary debate in Strasbourg. The group includes Bütikofer, Dutch Liberal Gerben-Jan Gerbrandy, German centre-left Jo Leinen, and centre-right Sirpa Pietikainen.

They have so far been unsuccessful.

To list a topic for the Strasbourg plenary, MEPs have to convince their group leaders, who discuss the agenda in a forum called the Conference of Presidents.

Although the agenda is decided on consensus, the political power of the groups behind the presidents plays a large role.

Until now, there has not yet been a majority in the Conference, a parliamentary source told this website. And the contact was becoming increasingly sceptical, noting that the schedule has become tighter due to the refugee crisis.

"Before the summer we had to fill some gaps. With the UN sustainable development goals, and the climate summit in Paris coming up, it will be difficult to make the case for another climate debate which is not about a legislative proposal", the source noted.

The European Commission is not in the driving seat either.

In a written answer to questions from the parliament, investment commissioner Jyrki Katainen noted that there are no plans to divest from the fossil fuel industry, or to set up any guidelines for its agencies.

"Please note that the term 'fossil fuel industry' is not a precise concept which makes it difficult to develop a clear attribution of issuers into this category. Consequently, the Commission has no statistics concerning the investments in assets issued by the fossil fuel industry, and cannot produce such information [about how much EU funds are invested in the fossil fuel industry]", Katainen wrote.

EU agrees common position for climate summit

Environment ministers agreed to demand a 50% cut in carbon emissions by 2050 and a review mechanism in case of an agreement at the upcoming climate conference in Paris.

EU supply chain law fails, with 14 states failing to back it

Member states failed on Wednesday to agree to the EU's long-awaited Corporate Sustainable Due Diligence Directive, after 13 EU ambassadors declared abstention and one, Sweden, expressed opposition (there was no formal vote), EUobserver has learned.

Opinion

Why are the banking lobby afraid of a digital euro?

Europeans deserve a digital euro that transcends the narrow interests of the banking lobby and embodies the promise of a fairer and more competitive monetary and financial landscape.

Latest News

  1. EU docks €32m in funding to UN Gaza agency pending audit
  2. 'Outdated' rules bar MEP from entering plenary with child
  3. Commission plays down row over Rwanda minerals pact
  4. EU socialists set to anoint placeholder candidate
  5. Why are the banking lobby afraid of a digital euro?
  6. Deepfake dystopia — Russia's disinformation in Spain and Italy
  7. Putin's nuclear riposte to Macron fails to impress EU diplomats
  8. EU won't yet commit funding UN agency in Gaza amid hunger

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us