EU bank to stop funding fossil fuel projects in 2 years

BERLIN – The European Investment Bank said Thursday that it will stop financing fossil fuel energy projects from the end of 2021 as part of an effort to fight climate change.

The decision, which ends fossil fuel funding a year later than initially proposed, follows lengthy negotiations among European Union member states, the bank’s shareholders.

“We will stop financing fossil fuels and we will launch the most ambitious climate investment strategy of any public financial institution anywhere,” the EIB’s president, Werner Hoyer, said in a statement.

Calling climate “the top issue on the political agenda of our time,” Hoyer noted scientists’ warnings that the planet is heading for a 3-4 degrees Celsius (5.4-7.2 Fahrenheit) increase in global average temperature by the end of the century.

“If that happens, large portions of our planet will become uninhabitable, with disastrous consequences for people around the world,” he said.

The 2015 Paris climate accord aims to cap global warming at no more than 2 degrees Celsius (3.6 Fahrenheit) by 2100 compared with pre-industrial times.

The policy change —which will also see the EIB prioritize lending for energy efficiency, low carbon technology and grid improvements — comes as the EU tries to ratchet up its climate efforts.

Earlier Thursday, Germany’s Foreign Minister Heiko Maas told diplomats and scientists in Berlin that “Europe must lead, because only then other countries such as China or India will stay the course too.”

He backed a proposal by the incoming European Commission for the 28-nation bloc to agree a Green New Deal that would see economic programs linked with efforts to reduce carbon emissions.

German Environment Minister Svenja Schulze said the EU should aim to reduce greenhouse gas emissions by up to 55% by 2030 compared with 1990 levels, in line with Germany’s national target. The current EU goal is for a 40% cut.

Despite its tough talk, Germany was one of the countries which had resisted a complete end to fossil fuel funding by the EIB. Conservatives in the German government wanted an exemption for natural gas infrastructure on the grounds that it can help wean countries off more polluting coal.


Environmental groups cautiously welcomed the EIB decision but warned that it contains some loopholes for some gas projects.

The EIB, which is one of world’s biggest public lenders, loaned 55.6 billion euros ($61.93 billion) in 2018.

Separately, Sweden’s central bank said Wednesday that it has ditched bonds issued by the Canadian province of Albert and the Australian states of Queensland and Western Australia because authorities there are not doing enough to reduce carbon dioxide emissions.

On Thursday, the European Commission announced that vehicle tires will have to come with clearer energy labels from 2021, to help consumers choose those that are most efficient.

The EU executive estimates that high rolling friction can increase fuel consumption by up to 30%, and more efficient tires could have the same effect as 4 million fewer cars on the roads. /gsg

source: newsinfo.inquirer.net

OPEC says cheap oil taking longer to subdue rival suppliers

LONDON  - OPEC on Tuesday raised its forecast of oil supplies from non-member countries in 2015, a sign that crude's price collapse is taking longer than expected to hit U.S. shale drillers and other competing sources.

In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast no extra demand for its crude oil this year despite faster global growth in consumption, because of higher-than-expected production from the United States and other countries outside the group.

In contrast, the U.S. government on Tuesday lowered both its 2015 and 2016 U.S. oil production forecasts, signalling that the 60-percent rout in benchmark prices since last summer may finally be weighing on shale output.

The U.S. 2015 crude oil production growth forecast was cut by 100,000 barrels per day (bpd) to 650,000 bpd from the previous report, according to the U.S. Energy Information Administration's short-term energy outlook. Meanwhile, it expanded the production decline forecast for 2016 by 400,000 bpd from a 150,000 bpd decline previously.

Benchmark Brent is trading below $50 a barrel, close to its 2015 low after an 18 percent drop in July. But OPEC has refused to cut output, seeking to recover market share by slowing higher-cost production in the United States and elsewhere that had been encouraged by OPEC's prior policy of keeping prices near $100.

Earlier this year, OPEC slashed its prediction of non-OPEC supply for 2015, expecting lower prices to prompt a slowdown. But on Tuesday, it raised the forecast by about 90,000 bpd following a 220,000-bpd increase in last month's report.

"U.S. onshore production from unconventional sources is currently expected to decline marginally in the second half of 2015 through year-end, while U.S. offshore production is expected to grow due to project start-ups," OPEC said.

Meanwhile, the EIA decreased its forecast of non-OPEC supply on Tuesday, lowering 2015 output by 50,000 bpd and 2016 output by 80,000 bpd compared to the previous month's report.

U.S. energy companies have been adding drilling rigs in recent weeks despite the price drop, and OPEC in the report raised its forecast of U.S. output in 2015 by 20,000 bpd. In March, OPEC was expecting a fall in production possibly by late 2015 as drilling subsided, although more recent data from the EIA shows that output peaked in March.

"OPEC is starting to recognise the resilience of U.S. shale," said Jamie Webster, analyst at IHS in Washington and an OPEC expert.

Oil prices fell after the report was released, extending an earlier drop. Brent crude was down $1.34 at $49.07 by 1434 GMT.

LOWER COSTS

A reduction in the cost of oil projects since the price crash is helping non-OPEC supply to compete in the market.

"The OPEC secretariat is indeed re-evaluating non-OPEC supply's ability to withstand prices," said Samuel Ciszuk, senior adviser on security of supply to the Swedish Energy Agency.

"Project costs have come down a lot and are continuing to fall, according to recent data. This is particularly so with regards to the U.S. light, tight oil - which has provided most of non-OPEC output growth, or in OPEC's view the oversupply."

OPEC also said its members continue to boost supplies. According to secondary sources cited by the report, OPEC produced 31.51 million bpd in July - 1.5 million bpd more than its 30-million-bpd target.

With OPEC forecasting demand for its crude will average 29.23 million bpd in 2015 - steady from last month - the report points to a 2.28-million-bpd supply surplus in the market if the group kept pumping at July's rate.

But Saudi Arabia, the driving force behind's OPEC's refusal to cut output, told OPEC it trimmed production by 200,000 bpd to 10.36 million bpd in July, down from June's record rate.

Some OPEC members such as Algeria are concerned by the drop in prices and want the group to reduce supply. Gulf members, however, have rebuffed calls for an emergency OPEC meeting and show no sign of willingness to consider output cuts.

In the report, OPEC still sees a sizeable slowdown in supply growth from non-OPEC next year and stuck to its view that rising global demand would erode the surplus in the market.

"Crude oil demand in the coming months should continue to improve and, thus, gradually reduce the imbalance in oil supply-demand fundamentals," it said.  — Reuters