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FMO’s Position Statement on Phasing out Fossil Fuels in Direct Investment Review | |
admin | |
2020-11-30 | |
出版年 | 2020 |
国家 | 欧洲 |
领域 | 气候变化 |
英文摘要 | FMO (the Netherlands Development Finance Company) opened public consultation on its draft ‘Position Statement on Phasing Out Fossil Fuels in Direct Investments’. E3G welcomes the proposed position’s exclusion of coal, Heavy Fuel Oil (HFO), and Life Cycle Oil (LCO). However, E3G notes that FMO – be it conditionally – allows for new direct investments in gas-based power generation and distributed energy under restrictive transition conditions.
Why tackle gas now?First, scenarios aligned with the Paris Agreement (1.5°C, no overshoot) largely require today’s global gas demand to decrease, not increase, by 2030, implying a decrease in gas consumption in many developing country markets. Second, as of 2019, gas is the leading contributor to global fossil emissions – whilst coal emissions are declining. Third, out of the 100-methane leakage hot spots worldwide, 50 are associated with oil and gas production. Carbon footprint and shadow carbon pricing methodologies used by multilateral development banks (MDBs) and development finance institutions (DFIs) often neglects these upstream – Scope 3 – emissions and uses conservative assumptions around the global warming potential of fossil gas. Fourth, to achieve the agreement’s 1.5°C temperature goal, global coal-fired power generation must be reduced 80 percent below 2010 levels by 2030 and requires replacing the power with portfolios of clean energy resources. However, replacement of this generation with fossil gas will not achieve the necessary reductions, and as the costs of renewables fall below the cost of gas, there is a risk of replacing one uncompetitive energy source with another. Lastly, newly installed renewable power capacity increasingly costs less than the cheapest power generation options based on fossil fuels. Solar PV – community, for example, can deliver power at $73 to $145 a megawatt-hour, according to the investment firm Lazard. By comparison, natural gas peaking plants, which utilities can turn on and off quickly to meet surging demand, deliver power at $152 to $206 a megawatt-hour. Debunking the technical issues for supporting gasThe position statement states that for developing countries fossil fuels – in reference to gas – “are at times required to build a reliable electricity sector and to improve the access to energy in these countries”. E3G believes that there are four compelling reasons why gas is not a bridge to a safe climate:
Understanding gas investments face risk
For FMO, policy and regulatory risks would be particularly material. For example, energy regulators in France and Spain refused permission for the construction of the Midi-Catalonia cross-border gas pipeline because it was deemed unnecessary and too expensive.
Regarding developing countries, gas imports can become a strain on public budgets if import prices exceed local ability to pay, and subsidies become necessary. When renewables start undercutting existing gas power plants, utilities, underwritten by public funds, could suffer a similar shock as Eskom in South Africa as a result of coal over-investment. Going further, price volatility can potentially cause national budget deficit. In turn, this could lead to a failure in meeting existing obligations such as, but not limited to, salaries and pensions. Decreased export revenues impact overall trade balances which would exert downward pressure on local currencies. As a result, foreign exchange reserves get used to maintain currency stability. Aligning with the Paris AgreementExpansion of gas demand in the long term is not compatible with a 1.5°C degree pathway. Many parts of the supply chain are also exposed to significant financial risk or come with development or social disbenefits.
E3G understands that in July 2019, FMO signed the Dutch Climate Accord, with the intention to start reporting on their climate impact from 2020 and will announce their action plans, including reduction targets, by no later than 2022, both for domestic and international investments.
Any exemptions should be governed by clear decision-trees and Emissions Performance Standards that can respond to evolving technologies, science and local context. In this context, proposed gas projects must:
When considering investments in gas-based power generation, E3G recommends that FMO adopts and applies the abovementioned conditions instead of the criteria prescribed in its draft position statement. Decommissioning of gas infrastructure or “early retirement and replacement” projects may be added to the exemptions if they accelerate the phaseout. Download the full consultation response here.
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URL | 查看原文 |
来源平台 | E3G |
文献类型 | 科技报告 |
条目标识符 | http://119.78.100.173/C666/handle/2XK7JSWQ/306371 |
专题 | 气候变化 |
推荐引用方式 GB/T 7714 | admin. FMO’s Position Statement on Phasing out Fossil Fuels in Direct Investment Review,2020. |
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