Fri Nov 15th, 2019 at 02:14:52 PM EST
Aligning Monetary Policy with the EU's Climate Targets
Detailed analysis of the Corporate Sector Purchase Programme (CSPP) of the European Central Bank (ECB) reveals a deep misalignment between ECBs policy interventions and European Union's climate policy objectives. Whereas EU climate policies try actively to transform the European economy to make it more sustainable, the CSPP merely reproduces the current state of the corporate bond market. The ECB therefore mirrors investment choices made by financial markets, even though financial markets seem misaligned with a mitigation path limiting the global warming to 1,5°. The weight of the most carbon intensive sectors within the CSPP portfolio is in line with the market neutrality principle claimed by the ECB, yet is profoundly troubling from the point of view of the ecological transition, as it maintains low capital costs and easy debt issuance conditions for the most polluting companies, without any assurance that these financial conditions serve the purpose of adjusting the underlying business and industrial models.
More below the fold ...
Developments of green initiatives in the financial market
The European Central Bank should `gradually eliminate' carbon assets, Christine Lagarde says. The ECB should phase out climate-warming investments by preferring green bonds, Lagarde said as she pitched to become the bank's first female president. Lagarde was cautious not to make `premature commitments' and pointed out that the ECB could not exclusively invest its 2.6 trillion Euros portfolio in green bonds "because there is not enough of a market". As head of the IMF, Lagarde campaigned for greater disclosure of the risk climate change poses to the financial system.
On 22 September, Banks with more than 47 trillion Dollars in assets, or a third of the global industry, adopted new U.N.-backed "responsible banking" principles to fight climate change that would shift their loan books away from fossil fuels. Deutsche Bank, Citigroup and Barclays were among 130 banks to join the new framework on the eve of a United Nations summit in New York aimed at pushing companies and governments to act quickly to avert catastrophic global warming.
On 26 September, the Bank for International Settlements (BIS) has launched an open-ended fund for central bank investments in green bonds. Responding to a growing demand for climate-friendly investments among official institutions, the BIS's green bond fund initiative helps central banks to incorporate environmental sustainability objectives in the management of their reserves.
Phase-out 2020: Monitoring Europe's fossil fuel subsidies
Under the Paris Agreement, European governments and the European Union (EU) are committed to a low-carbon transition, with a goal of net zero emissions by the second half of this century, while making `finance flows consistent' with that pathway. If European governments are to achieve this, they must phase out their support to the production and consumption of fossil fuels.
Shifting government support away from fossil fuel production and consumption is also an important means of achieving Europe's wider economic, social and environmental objectives. These include unlocking government resources for public goods, such as education, as part of wider fiscal reform; levelling the playing field for clean energy and energy savings; and improving public health by reducing air and water pollution.
Rhetorically at least, European governments have promised to end their support to fossil fuels. The EU and all its Member States have committed to phasing out environmentally harmful subsidies, including those to fossil fuels, by 2020. European governments have made parallel pledges to end inefficient fossil fuel subsidies under the G7 and the G20.
European governments are not on track to meet 2020 subsidies pledge
Unfortunately, European countries and EU bodies are failing to match these bold commitments, which risks undermining their decarbonization efforts. In spite of their high-level pledges, they have no common definition for subsidy estimation, nor clear plans or timelines for phasing out these subsidies. Beyond a voluntary mechanism under the European Semester, there is no comprehensive EU-level system to monitor subsidies and hold the EU and its Member States to account for failing to address them. With only a few exceptions, European governments have done very limited reporting of their fossil fuel subsidies.
Subsidies to fossil fuel production put Paris commitments at risk
To meet global climate objectives, which aim to avoid dangerous climate change, three quarters of known fossil fuel reserves must be left in the ground. However, European governments continue to subsidise exploration for fossil fuels, which puts Europe at serious risk of missing the goals of the Paris Agreement.
The EU budget's research and innovation programme, Horizon2020, gave 12 million per year for shale gas-related exploration activities; and France and the UK together provided 253 million per year in public finance to fossil fuel exploration. If France continues this support it would undermine the government's 2017 announcement that it will stop granting new licenses for oil and gas exploration.
As part of the wider support provided to oil and gas production outlined above, our research found that the key EU investment and development banks, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), together provided over 2.4 billion of public finance for gas infrastructure projects inside and outside the EU. This is despite mounting evidence that demand for gas in Europe is falling, in part due to success in meeting the EU's own energy efficiency targets.
European governments have also specifically committed to phase out subsidies to hard coal mining by 2018. However, our research revealed that at least 3.3 billion per year was provided annually in fiscal support to coal mining across the countries and institutions reviewed (including for the transition away from coal - see below) ...
Flooding in the United Kingdom - Tory policy failure
Venice is flooded by the highest tides since 1960s
Dutch PM Mark Rutte and his Liberal Freedom Party's laissez-faire attitude towards the Paris Climate Agreements in recent years ... on 24 June 2015 the Urgenda Foundation, together with 900 citizens, won the Climate Case against the Dutch Government, forcing it to take more measures against climate change.
On 9 October 2018 the judge in High Court again ruled in favour of Urgenda and the climate. The State appealed again. The case will be heard before the Supreme Court on 24 May 2019. The rulings were upheld, PM Mark Rutte has been caught in a crisis by surprise !!??
Urgenda Climate Change Judgment Survives Appeal in the Netherlands | UICN - Oct. 2018 |
This case was an appeal from the 2015 decision by the District Court in The Hague. The lower court decided that the Dutch State acted negligently and therefore unlawfully towards the environmental NGO Urgenda by implementing a policy that "only" pursued the reduction targets that were imposed upon the Netherlands by EU-law for 2020: a 21% reduction for sectors covered by the EU Emissions Trading Scheme (basically large industry and power stations), and a 16% reduction for non-EU ETS sectors (such as transport and agriculture).
Although the District Court did not find that the State did directly breached its legal obligations under a range of legal instruments, such as the UNFCCC, Kyoto Protocol, various EU climate change instruments, and the European Convention on Human Rights, it found that the State breached its duty of care towards its citizens, which, under Dutch tort law, constitutes an unlawful act. The District Court ordered the State to limit the joint volume of Dutch annual greenhouse gas emissions, or have them limited, so that this volume will have reduced by at least 25% at the end of 2020 compared to the 1990 level.
Urgenda, the NGO that initiated the case, is a foundation established in 2008 to stimulate and accelerate the transition processes to a more sustainable society, beginning in the Netherlands, through legal action. More than 800 individual citizens joined the suit, so the case was lodged by Urgenda acting on its own behalf as well as in its capacity as representative of these individuals. Under Dutch tort law, NGOs are allowed to initiate public interest cases.
The government of the Netherlands appealed the case mainly because it objected to the interference by the Court when deference should be given to the Parliament.
○ The Netherlands struggles with nitrogen headache
THE GREEN REVOLUTION HAS BEGUN ...
Farmer protest in The Hague, seat of government
Worst of all for the "freedom" party, the PM Rutte coalition cabinet had to take drastic measures ... cutting the max. speed limit on highways from 130 to 100 km per hour. As key reform in 2012, Rutte had kept promise to his constituents and increase the speed limit to 130, the leftwing and green parties in the opposition gave their warnings.