ITV News Economics Editor Joel Hills reports from Davos
The world must decarbonise. Progress has been made but not enough. The poster girl of climate activism arrived in Davos to warn that companies cannot be trusted to make the changes necessary to avoid catastrophic levels of global warming. “These people are going to go as far as they possibly can, as long as they can get away with it,” Greta Thunberg told journalists at the World Economic Forum.
“They will continue to invest in fossil fuels, they will continue to throw people under the bus for their own gain”. Greta Thunberg is petitioning for new fossil fuel extraction to be made a criminal offence. She was joined on stage by the Head of the International Energy Agency (IEA), Fatih Birol.
Climate change and how to hold it in check is being discussed daily in sessions at the World Economic Forum. Above Davos, indeed across the Alps the glaciers are in slow retreat. In May 2021, the IEA said energy companies had to stop all new oil and gas projects more or less immediately In order to reach Net Zero by 2050. Since then two things have happened. The war in Ukraine has shown how dependent we still are on oil and gas. And the drilling has continued. According to analysis by the campaign group Shareaction, since May 2021 ten of the world largest banks - including JP Morgan, Citi, Bank of America, BNP Paribas, HSBC, Barclays, Morgan Stanley, Goldman Sachs, Credit Agricole and Societe Generale - have funded 20 of the world’s top energy producers to the tune of tens of billions of pounds. JP Morgan helped companies that are planning new development of oil and gas to raise over £66 billion. Barclays was involved in deals with a total value of £40 billion. CITI is on the list and the bank’s chief executive is in Davos. I asked Jane Fraser if Citi had ever refused to fund the development of new oil and gas extraction on climate change grounds. “We need to have energy security and we need to be operating on cleaner technologies and the two cannot be mutually exclusive,” she replied. “As a bank we will refuse to finance certain things and we will be happy to finance others on many, many different factors and climate risks is one of those factors”.
We contacted all of the banks in Shareaction’s report. Those who responded said their lending practices were ethical and responsible. Labour is in Davos and in force. Sir Keir Starmer and Rachel Reeves met with executives from JP Morgan, Bank of America, Citi and Morgan Stanley this morning. Rachel Reeves was against forcing banks to immediately cease investment in new oil and gas extraction. “I think those are decisions for banks to take but the truth is that oil and gas are still going to play an important part of our economy and our energy mix for many years to come.”
There is general agreement that it will take years for us to develop renewable energy sources and wean ourselves off fossil fuels but Lord Nick Stern, a respected climate economist, told ITV News that there are enough existing oil and gas reserves to manage that transition and that companies should not be drilling for more. “Exploration, if you’re lucky, gets you more output ten years from now,” Stern told me.
“It doesn’t make any sense and you cant use the current crisis as an argument to produce more in the medium and long-term.
"When these sources of energy are on their way out, as they must be on their way out if we are to keep climate change under control.” Up above Davos, a group of climate campaigners prepare for another night outdoors in sub-zero temperatures.
They are showing dedication to the cause. They hope governments and companies will too by delivering on the promises they have made. A spokesperson for Barclays said: “We believe that we can make the greatest difference by supporting these clients to transition to a low-carbon economy, facilitating the finance needed to change their business practices and scale green technologies.
"Where carbon-intensive companies are unable or unwilling to reduce or eliminate their emissions, we will reduce our support over time. Integrating the IEA NZE2050 1.5°C-aligned temperature rise scenario, we have set 2030 targets to reduce the emissions that we finance in four of the highest emitting sectors in our financing portfolio – including the Energy sector – and we have a target to facilitate $1trn of Sustainable and Transition financing by 2030.” A spokesperson for JP Morgan said: “We are working with our clients to help promote energy affordability and security, as well as reduce emissions and scale investments in clean technologies.” A spokesperson for BNP Paribas said: “In May 2022, BNP Paribas committed to reduce its credit exposure to oil and gas production by 12% by 2025.
"BNP Paribas has made it a priority to support low carbon transition throughout the economy. In particular, the bank has set itself the goal of financing renewable energies by 30 billion euros by 2025, a fourfold increase in its support for renewable energies compared to 2015.” A spokesperson for HSBC said: “HSBC’s aim is to reduce emissions in line with a 1.5 degree pathway, promote energy security, and ensure energy affordability and access, as part of our commitment to a net zero future.
"In line with our 1.5 degree-aligned 2030 financed emissions targets and updated energy policy we will no longer provide new finance or advisory for the specific purposes of new oil and gas fields or related infrastructure, or for the most carbon-intensive oil assets.
"To accelerate an orderly transition to net zero, we continue to support clients who are playing an active role in the energy transition, including through regular engagement on their transition plans:”.
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