Use fewer fossil fuels and rely more on renewable energy

Published on: 23 March 2022
coal-vs-renewables

ING will increase renewable energy financing by 50% by 2025 and end dedicated oil and gas financing. IEA: 1.5 °C climate goal requires "massive and immediate investment in clean and efficient energy." ING's renewable energy portfolio has doubled to 60%. We'll increase renewable lending by 10% per year until 2025.

ING's energy portfolio is on the path to net zero emissions. We announced new steps to strengthen that today.

In a nutshell? We will increase new renewable energy financing by 50% by the end of 2025 and will no longer provide dedicated financing for new oil and gas fields.

But what exactly does that mean? Here are some points to consider if you want to better understand ING's energy strategy.

1. Not all energy is created equal: We distinguish between power generation and the production and processing of fossil fuels when financing the global energy system. The process of converting energy into electricity is referred to as power generation. In this case, the type of energy used (renewables, oil, gas, coal) is important in understanding how the power generated affects the climate.

We've made good progress in financing the power generation sector. We do not finance any oil-fired power generation. In 2015, we ceased new financing for coal-fired power generation and pledged in 2017 to phase out coal-fired power plants by 2025. We do finance natural gas power generation, which is the least harmful fossil fuel. Of course, the majority of our funding in the power generation sector goes to renewables such as wind and solar power.

We distinguish between extracting oil and gas from the ground (upstream), transportation (midstream), and conversion into fuels when financing the production and processing of fossil fuels (downstream). We concentrate our efforts on upstream oil and gas, which generates the majority of the climate impact.

2. Increasing the availability of renewable energy is the most effective way to reduce demand for oil and gas: The International Energy Agency (IEA), which essentially sets the guidelines for the energy sector to achieve the 1.5°C climate goal, emphasizes the need for a "massive and immediate investment in clean and efficient energy." This is outlined in their report, 'Net-Zero Emissions Roadmap by 2050.' If renewables succeed quickly enough, demand for oil and gas will fall, and no new oil and gas fields will be needed.

3. The best way to decarbonize the energy sector is from within. It is obvious that the oil and gas industry must evolve. We believe it is our responsibility to work with our clients to help them achieve their climate goals: Whether we like it or not, more than 80% of today's energy is derived from fossil fuels. Our role is to help clients improve their sustainability practices as quickly as possible by establishing strict conditions on what we will and will not finance.

The oil and gas industry will continue to play an important role in the energy mix in the coming years. There will always be a need for oil and gas, even in a net-zero world. We will continue to support this while increasing investments in renewables and gradually decreasing funding for upstream oil and gas by 12% by 2025 and 19% by 2030. This puts us on track to meet the IEA's net-zero by 2050 target of minus 53% by 2040.

We will continue to finance solar and wind energy, as well as support technological innovation in advanced batteries, hydrogen, and carbon capture and storage. We intend to increase lending to renewables by 10% per year until 2025.

4. We are already doing a lot of good work in the field of renewable energy. ING's exposure to renewables has more than doubled in the last five years, accounting for 60% of our power generation portfolio.

We can do more, which is why we've set a goal of increasing the amount we lend to renewables by 50% in 2025 compared to 2021.

5. Today's news is a good step, but there are still more steps to be taken. Our power generation and upstream oil and gas portfolios are already fully in line with the Paris Agreement's most ambitious climate goal of 1.5 degrees Celsius. What we've announced today expands on that. But there is always room to do more, such as broadening our efforts to include midstream and downstream. We're actively involved in determining the best path forward, not only for ourselves, but also for the banking sector. We are a member of the Net-Zero Banking Alliance working group, which is developing guidelines for the entire oil and gas value chain. The working group's findings are expected by the end of the year.

6. Carbon reduction is not the only priority: We balance three key interests in developing ING's energy strategy: the need to decarbonize to combat climate change, the need for energy to remain affordable for people and businesses, and the need for energy supply security. While climate change is one of the world's most pressing issues, all three of these factors are critical. The Russian invasion of Ukraine demonstrates the critical importance of energy security and affordability.

To balance all three energy interests, we will continue to provide financing to clients who are actively involved in keeping oil and gas flowing to meet current and declining future demand as outlined in the IEA's roadmap, as well as investing in renewables, electrification infrastructure, and energy efficiency. We will continue to accept responsibility for reducing climate impact through our own actions and measures, as well as by assisting our clients in their transition to a cleaner future.

Source: Ing newsroom

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