Major banks ‘far off track’ to hit climate targets: WRI
Major banks are "far off track" to meet their climate pledges, and many of their commitments are not ambitious enough, non-profit the World Resources Institute (WRI) has found.
WRI assessed 25 banks in 10 countries, including the four biggest in the US — JP Morgan Chase, Wells Fargo, Citibank and Bank of America — and the world's biggest bank in terms of assets, the Industrial Commercial Bank of China. WRI analysed the institutions' net zero commitments across transparency and ambition, implementation, credibility and nature and equity.
Of the 25 banks analysed, just four have a "long-term commitment to phase out or [phase] down oil and gas finance", WRI found. Most of the banks — 16 of the 25 — have committed to phase out coal financing by 2040 or earlier.
Although most banks reported "green" financing — albeit using different definitions — this was often significantly lower than financing for fossil fuels, it added. If the world is to meet climate targets in line with the Paris Agreement, investment in "clean energy" must by 2030 outpace fossil fuel investments by 10:1, according to the IEA. But the banks assessed "fell far short of this mark", averaging a ratio of 1.3:1, WRI said.
The WRI pointed to "significant blind spots" in banks' plans. The majority of the institutions it assessed do not have a commitment to reduce deforestation, while "high emitting sectors like shipping and real estate are barely covered", it found.
Overall, banks' commitments are varied and standardisation is lacking, making comparison difficult, WRI noted. A UN-appointed group in November 2022 set out guidelines to "bring integrity to net zero commitments", while the UK in October last year issued a "gold standard" climate transition plan framework for companies and financial institutions to follow.
The focus on private sector finance is intensifying, ahead of the UN Cop 29 summit, set for November in Baku, Azerbaijan. Finance will be the key topic at Cop 29, including discussions around funds to tackle climate change in developing countries.
Several jurisdictions, including the EU, are clear that public climate finance will not be enough to address climate change, and that private sector finance must be mobilised.
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US inflation slows to 2.9pc in July, 3-year low
US inflation slows to 2.9pc in July, 3-year low
Houston, 14 August (Argus) — US inflation slowed in July to the lowest since March 2021, a sign of decelerating pricing pressure that point to a likely cut in borrowing costs by the Federal Reserve next month. The consumer price index (CPI) slowed to an annual 2.9pc in July from 3pc in June and 3.3pc in May, the Bureau of Labor Statistics reported today. So-called core inflation, which strips out volatile food and energy prices, rose by 3.2pc in July, the smallest gain since April 2021. After the report, the CME's FedWatch tool signaled a 58.5pc probability that the Fed will cut its target rate by a quarter point in September from 47pc odds Wednesday. Probabilities of a half point cut fell to 41.5pc from 53pc the prior day, suggesting underlying signs of stubborn inflation in the details of today's report. The energy index rose by an annual 1.1pc in July, accelerating from 1pc in June, while the gasoline index contracted by 2.2pc in July compared with a 2.5pc contraction in June. Energy services rose by an annual 4.2pc, slowing from 4.3pc the prior month. Food costs rose by 2.2pc in July, matching the prior month. Shelter rose by 5.1pc in July, easing from 5.2pc the prior month. Transportation services rose by 8.8pc in July following a 9.4pc gain in June. After falling to 3.1pc in January, inflation had reaccelerated to as high as 3.5pc in March as job growth and other economic data had come in stronger than expected. That prompted the Federal Reserve to hold off on widely expected rate cuts after hiking its target rate to a 23-year high of 5.25-5.5pc in July 2023 and holding it there since, saying it needed "greater confidence" that inflation was easing to its 2pc target. The Fed, in its June policy meeting, penciled in one likely quarter-point cut this year, down from three signaled in March. But a weaker than expected employment report for July early this month had prompted an equity market downdraft last week on recession concerns and fears the Fed had been too slow to begin cutting rates. CPI rose by a seasonally adjusted 0.2pc in July after a 0.1pc gain in June. Core CPI was up by 0.2pc for the month after a monthly gain of 0.1pc in June. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Iran oil min nominee struggles for parliament approval
Iran oil min nominee struggles for parliament approval
Dubai, 14 August (Argus) — New Iranian president Masoud Pezeshkian's nominee to lead the country's critically important oil ministry is facing an uphill battle to secure a vote of confidence in parliament, largely because of the highly polarized nature of Iranian politics. Mohsen Paknejad, an oil sector veteran with close to three decades of experience in senior leadership roles in Iran's energy sector, was named as Pezeshkian's pick for oil minister early on 11 August, alongside the new president's other cabinet nominees that included former deputy foreign minister Abbas Araqchi to head up the foreign ministry and ex-central bank governor Abdolnaser Hemmati to lead the finance ministry. The response to many of Pezeshkian's cabinet nominees has been mixed, with some of the negative reaction coming notably from those who supported the new president as the sole reformist candidate in the election. Paknejad is no exception. Since his first meeting on 12 August with members of parliament, who must ultimately ratify the president's cabinet picks, Paknejad has been facing criticism from some quarters for a perceived lack of suitable experience and for the absence of a coherent plan for his proposed tenure in the oil ministry. "The nominated ministers of oil and energy appeared at a meeting of the parliament's energy commission yesterday to answer questions… [but] neither had a plan to present," energy commission member Ramezan Ali Sangdovini said on social media platform X on 13 August. There have also been objections over Paknejad's close relationship with ex-oil minister Bijan Zanganeh, who most recently served for the whole of former president Hassan Rohani's two terms in office. Zanganeh, who has had two separate stints as oil minister and one as energy minister, has become a divisive figure in Iranian politics, praised by those who favour opening up Iran's oil industry to foreign investment but reviled by those who consider outside involvement as interference. Zanganeh has also faced allegations of corruption over a gas supply contract that Iran signed with a UAE company in 2001, allegations he vehemently denies. The contract with Crescent Petroleum was to export 1bn ft³/d (10.3bn m³/yr) of gas from Iran to the UAE but the supplies never materialized and Iran was later forced to pay damages. "Zanganeh was in and around the oil ministry for more than 15 years," says one former official at state-owned oil company NIOC. "He made many friends, but also many enemies. And not just in oil circles, but also beyond." Late addition Paknejad held his most senior positions while Zanganeh was oil minister. And it is this close relationship, as well as Zanganeh's strong and public support for Pezeshkian during his election campaign, that has prompted suggestions among some parliamentarians that Paknejad's selection was ultimately Zanganeh's doing. "In terms of political and management policies, he and Zanganeh are like two faces of the same coin," energy commission member Mohammad Kaab-Omir said on X. Others think Zanganeh's role in the nomination should not be overstated. "Was Zanganeh consulted on Paknejad? That is very likely, yes. But to say it is his pick is not accurate," the former NIOC official said. In the days leading up to Pezeshkian's cabinet nominations, Paknejad was not even in the frame, according to the Iranian press, which instead touted a host of other names as likely candidates including former NIOC managing directors Masoud Karbasian and Rokneddin Javadi, former oil minister Gholamhossein Nozari and former deputy oil minister Seyed Emad Hosseini. Nozari had been a leading contender up until late last week, but pushback from the reformist camp saw him fall by the wayside, according to former NIOC officials. Hosseini was then tipped to be the final nominee, only for a last minute change of heart by Pezeshkian. The reason for the shift away from Hosseini is unclear but it could explain why Paknejad appeared so unprepared in his preliminary meetings with members of parliament. Parliament typically has a week to study the president's cabinet picks before taking a vote of confidence. The open sessions to vote on the nominees are due to begin on 17 August. At this point, the cards look stacked against Paknejad but given the role of internal politics in the vetting process, he still has time to turn it around. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU Cop 29 negotiating mandate light on finance goals
EU Cop 29 negotiating mandate light on finance goals
Brussels, 14 August (Argus) — An EU draft negotiating mandate ahead of the UN Cop 29 climate summit reiterates calls for a global approach to carbon pricing and stronger climate plans, but remains light on climate finance commitments. EU environment ministers are working on the EU's negotiating mandate for the Cop 29 climate talks in Baku in 11-22 November. Conclusions are expected to be adopted in October. The current text calls on other jurisdictions to "introduce or improve" their own carbon pricing mechanisms, including carbon markets aligned with the Paris Agreement. The EU wants "action" to scale up global carbon pricing and promote harmonisation. Negotiations on outstanding elements of Article 6 of the Paris climate agreement, which includes two market-based carbon pricing mechanisms, will continue at Cop 29. But the draft merely reconfirms the EU's commitment to existing climate finance goals, although finance is set to be the overarching theme of the Baku summit. In Baku, Cop parties will have to agree on a new climate finance goal — known as the new collective quantified goal (NCQG). This represents the next stage of the $100bn/yr of climate finance that developed countries agreed to deliver to developing countries over 2020-25. The EU's draft recalls that the bloc and its member states are the world's largest climate finance contributors, providing "at least around" a third of the world's public climate finance. The EU also notes the "overachievement", by developed countries, of the collective $100bn/yr goal for climate finance. Although developed nations surpassed the goal by $15.9bn in 2022 , it was missed in 2020 and 2021, according to the OECD. Some developing countries have called for at least $1 trillion-1.3 trillion/yr for the new goal, but developed countries have yet to come forward with an amount. Barring future input from EU finance ministers, the current draft text vaguely "invites" other countries to scale up international climate finance. The text also emphasises that public finance alone cannot deliver the levels of funding needed to transition to a climate-neutral global economy. Mobilisation of "private, philanthropic, and innovative" climate finance is essential, the text states. The draft also further urges nationally determined contributions (NDCs) — climate plans — to be aligned with the Paris agreement's 1.5°C global warming limit. The Cop 28 final text last year encouraged parties to have "ambitious, economy-wide emission reduction targets, covering all greenhouse gases, sectors and categories and aligned with limiting global warming to 1.5 °C" in their next NDCs. Countries are expected to hand in updated climate plans to the UN by February 2025. The EU reiterates the importance of transitioning away from fossil fuels, tripling renewable energy capacity, and doubling annual energy efficiency gains by 2030, also agreed at Cop 28. The draft climate conclusions further note that NDCs are "collectively" far from being on track towards limiting global warming to 1.5°C and achieving the Paris agreement's long-term goals. But the ministers' draft text makes no mention of any need to readjust the EU's targets, particularly the commitment to a 55pc reduction in greenhouse gas (GHG) emissions by 2030. The European Commission's communication earlier this year, on a 90pc net GHG emissions reduction by 2040 for the bloc, compared with 1990 levels, only "represents a basis" for discussions on an EU NDC to be submitted ahead of Cop 30. With a nod to Azerbaijan's political situation, the text adds that climate transition needs to be just and follow a "human-rights-based approach". By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
California pares LCFS goals to tougher targets: Update
California pares LCFS goals to tougher targets: Update
Updates trade discussion, adds links to other coverage. Houston, 13 August (Argus) — California will pursue transportation fuel carbon reduction targets in 2025 nearly twice as tough as originally proposed under final Low Carbon Fuel Standard (LCFS) rulemaking language released late Monday. The California Air Resources Board (CARB) will consider a one-time tightening of annual targets for gasoline and diesel by 9pc in 2025, compared with the usual 1.25pc annual reduction and a 5pc stepdown first proposed in December 2023. Staff maintained a 30pc reduction target for 2030, compared to the current 20pc target. Final rulemaking language introduced a new 20pc/yr cap on a company's credit generation from soybean- and canola-oil-based biodiesel or renewable diesel to begin in 2028. The updated rule also dropped proposals to require carbon reductions from jet fuel in addition to gasoline and diesel, a controversial proposal aligned with governor Gavin Newsom's (D) ambitions for lower-carbon air travel but which participants warned would not achieve its targets. The new proposal immediately jolted a lethargic credit market that earlier this year slumped to the lowest spot price in nearly a decade under the weight of growing credit supplies. Current quarter trade raced higher by $12.50 — 26pc — in rare after-hours activity less than two hours after CARB staff published the latest documents. Trade continued up to $65/t in the first half of Tuesday's session before retreating in later hours back below $60/t. Public comment on the proposals will continue to 27 August ahead of a planned 8 November public hearing and potential board vote. The program changes could be in place by the end of the first quarter of 2025, according to staff. LCFS programs require yearly reductions to transportation fuel carbon intensity. Higher-carbon fuels that exceed these annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives. Surging use of renewable diesel and outsized credit generation from renewable natural gas have overwhelmed deficit generation to create a glut of credits available for future compliance. LCFS credits do not expire, and 26.1mn metric tonnes of credits — higher by 16pc than all the new deficits generated in 2023 — were available for future compliance by the end of March. Credits fell in May to trade at $40/t, the lowest level for current quarter credits since June 2015. California late last year formally proposed tougher annual targets, off-ramps for certain fuels and other changes to North America's largest and oldest LCFS program. Staff had initially targeted March to put ideas including a one-time, 5pc reduction to targets in 2025 and automatic mechanisms to match targets to credit and deficit generation before the board for formal approval, but they delayed that meeting after receiving hundreds of distinct comments on the original proposal. Staff shifted the 2025 target to at least 7pc after an April workshop discussion and another record-breaking quarter of increases in credits available for future compliance. The 9pc recommendation followed the continued growth of credit supplies in recent quarters. Previous modeling estimated that such a target could draw down the credit bank by 8.2mn t in its first year. Uncertainty over how fuel suppliers and consumers would respond to that target led staff to leave in place the proposed 30pc target by 2030. An outright cap on credits generated from soybean- or canola-oil derived biomass-based diesels augments initially proposed "guard rails" on crop-based credit generation through verification. The change would send a stronger market signal preferring waste-based feedstocks for diesel fuels that California expects to replace with zero-emission alternatives, staff said. And staff dropped a proposed obligation on jet fuel used in intrastate flights, estimated to make up 10pc of California's jet fuel consumption. Participants had warned the measure would stoke more credit purchases than renewable jet fuel buying, due to the structure of the aviation fuel market . By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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