First Big Bank To Cut Funding for New Fossil Fuel Projects Is European, of Course

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Big names in the financial industry promised us all publicly they’ll stop giving money away for fossil fuels, but proper action was not taken. Now there’s a big player in town that wants to spark that change for the better, exactly when fuel prices are soaring. Timing could’ve not been any better.
Dutch banking group ING confirmed it will stop any kind of funding for new fossil fuel projects, even if they were already approved in the first quarter of 2022. The financial company will keep the money going for any contracts that were signed before the 1st of January 2022, but it won’t work again with key players from the oil and natural gas industry that are looking to keep the production going.

ING says it heard what the International Energy Agency stated and is looking to do its part in tackling rising global temperatures. The bank’s energy chief Michiel de Haan told Reuters that power generation will still be of interest to ING, but from now on, the focus is being put on renewable alternatives like solar, wind, and hydro. There was no mention of nuclear energy, which was in some way expected as the material used in nuclear power plants is non-renewable.

The Dutch financial group will keep its promises made towards its current fossil fuel partners but intends on increasing financing for alternative sources of energy by 50% until 2025. This comes as no surprise, as the energy sector has seen a boom in 2021 when it comes to lending for solar and wind developments.

While ING is not one of the biggest banks in the world, its decision to cut fossil fuel funding from its portfolio is still a strong signal, one that’ll have an impact, especially in Europe. A report published by Bloomberg in 2021 showed JPMorgan, Wells Fargo, and Citigroup are the top three financial entities that keep working with existing or just established gas and oil projects. But none of these banks made the same strong and growing investments in fossil fuels as China’s Postal Savings.

Exxon Mobil, Shell, BP, and Saudi Aramco are the latest beneficiaries of loans meant to help kickstart new operations or grow existing ones.

ING’s move becomes more important as a starting pressure point since The Paris Agreement hasn’t had the expected impact on the oil and gas industry. Companies on both sides of the aisle have kept working together despite what world leaders agreed upon.

For now, quitting funding new fossil fuel projects won’t have a big impact on the prices we pay at the pump. However, it is a clear signal that cheaper gas (petrol) and diesel won’t be soon available. This is true, especially for Europe, where, before ING, the European Investment Bank (EU’s lending institution) cut financing for fossil fuels and renewables entirely. Furthermore, with the sanctions put on Russia, the U.S. stopping investments abroad in this sector since last year, and Saudi Arabia now refusing to increase production after we’ve all fought a health situation globally, there’s little hope for any reasonable prices in the near future.

The switch to electric vehicles (EVs) becomes more and more attractive. But, unfortunately, it feels forced and will have a resounding impact on almost everything – from the price of bread to the plane tickets you buy for your vacation.
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About the author: Florin Amariei
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Car shows on TV and his father's Fiat Tempra may have been Florin's early influences, but nowadays he favors different things, like the power of an F-150 Raptor. He'll never be able to ignore the shape of a Ferrari though, especially a yellow one.
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