FINANCE AND CORPORATES
The fossil fuel industry survives by externalising the health, environmental, and climate costs of its business, and through support from financial institutions.
Loans, investment, and insurance enables fossil fuel companies to stay in business, and many financial institutions have continued to hand Europe’s most polluting utilities tens of billions in support since the Paris climate Agreement was signed. Thankfully, times are changing, and banks, investors, and insurers are realising one by one that doing so risks both their money and their reputations.
Avoiding climate breakdown means a 2030 end date for coal in Europe, and a fossil-free, fully renewables-based power system by 2035. Every financial institution with ties to Europe’s most polluting utilities has a responsibility to help propel those utilities towards a rapid and just energy transition, and commitments to close – not sell – coal plants by 2030 and gas plants by 2035 at the very latest. If utilities cannot or will not do this, then they must cease support for them altogether.
In addition to the above, a mobilisation of investors and consumers fostering sustainable renewable energy development is necessary, so as to replace fossil fuels. And for that purpose, corporations and energy cooperatives, beyond existing energy utilities, are key actors.
WHAT FOSSIL COMPANIES DO
Coal, oil, and gas companies are giving themselves green makeovers, but even as some scale up renewables, they remain the same dirty energy firms at heart. They continue to block government progress, destroy villages, pollute our air and water, promote false solutions like coal to fossil gas replacements, and burn the dirty fuels that are driving the climate crisis.
According to a report by Europe Beyond Coal and Ember, there is a substantial gap between what the International Energy Agency’s (IEA) Net Zero Emissions by 2050 report says major European coal-burning utilities must do to reach net zero by 2050 and limit the increase in global temperatures to 1.5C above pre-industrial levels, and what their current plans will deliver in practice. Of the 21 coal-burning utilities analysed in Limited Utility: The European energy companies failing on net zero commitments, not one was found to have aligned all their plans with the IEA’s science-based milestones to meet the mid-century target.
To protect people, nature and our global climate, and deliver the just transformation required to meet the Europe’s climate commitments, utilities must be compelled by responsible financial institutions to break with coal and fossil gas at a time frame consistent with the IEA’s net zero roadmap, and increase the speed and scale of their investments in wind and solar power. Europe will remain vulnerable to energy price and supply volatility until all fossil fuels are eradicated from the continent’s energy supply, and replaced with renewable sources of energy.
Over 60 percent of advertisements from fossil fuel companies are ‘greenwashing’ according to new research. To cut off a vital channel that coal barons and other fossil companies use to promote their inadequate efforts on climate action, while a vast majority of their investments still go into fossil fuels, a European Citizens’ Initiative to “Ban Fossil Fuel Advertising and Sponsorships” has been launched by more than 20 organisations.
COAL AND THE FINANCE INDUSTRY
Coal companies and other fossil fuel firms need to have a credible plan, and robust policies in place to phase out coal by 2030 the latest, and so do the financial institutions that keep polluting them in business through either loans, bonds, underwriting, or insurance.
The Coal Policy Tool by Reclaim Finance analyses the quality of policies adopted by financial institutions.
CORPORATES AND RENEWABLES
Wind and solar energy have been the fastest developing power capacities in the past decade. Near 200 GW of wind and solar were installed globally in 2020 and about 39 GW only in Europe.
From the IPCC, to the IEA and their Net Zero by 2050 pathway, or IRENA’s World Energy Transitions Outlook: 1.5°C Pathway, wind and solar technologies are now widely identified as main drivers for a quick and clean transition for the power sector.
Expert groups have produced analysis and modelling that demonstrate the central role wind and solar will play in the future European energy systems. The PAC scenarios from CAN Europe and the EEB that looks at the full energy transition or Agora Energiewende’s political action plan for “Phasing out coal in the EU’s power system by 2030” with a focus on a coal exit are two more recent notable ones.
Meeting carbon neutrality by 2040 and the zero pollution ambition can only mean one thing: Europe’s power sector needs to become fossil-free and transform into a fully renewable based power system by 2035.
Thus, by 2035, wind and solar installed capacities must at least quadruple in Europe.
To meet this important milestone in our collective race against time, a mobilisation of investors and consumers fostering renewable energy development is necessary. And for that purpose, corporations and energy cooperatives, beyond existing energy utilities, are key actors.
Corporations need cheap and reliable source power to run. In 2019, industry and services represented about two-third of electricity demand in Europe (source Enerdata). During the past decade, renewable energy sources have sustained massive decreases in their cost to become the cheapest source of low-carbon energy competing with coal and gas. This corporate sector’s shift towards renewable power would not only contribute to removing fossil fuels from the energy mix, but also constitute a formidable source of new renewable energy demand.
From self-investment in renewable energy projects, grid or storage, to contracts with green power supplier or power purchase agreements (PPA), there are many solutions for the corporate sector leading to a same result: a supply from cheap and reliant renewable electricity that will contribute to remove all fossil fuel from the power system and a booming of renewable power demand. When doing so, corporate businesses must meet several conditions: commit to a timely exit from all fossil fuels, promote the development of renewables as an enactment of the fossil exit and, finally, ensure the renewables contracted are sustainable, nature-friendly and respects communities and human rights alike.
Read the report
SOLAR POTENTIAL OF COAL SITES IN TURKEY
The report shows that approximately half of Turkey’s open-cast coal mines are suitable for conversion to solar farms. Taken together, they would boost the country’s solar capacity by 170 percent, and produce enough electricity to power 6.9 million homes.