ING will reduce the financing of oil and gas extraction, but will take the time to do so. This is evident from the TERRA report in which the largest bank in the Netherlands today formulates the climate ambitions for the coming decades.
At present, ING has a total of EUR 4 billion in loans to inflate oil and gas. This should be reduced by 19% to EUR 3.2 billion by 2040.
This is mainly happening from 2030, according to this graph.
ING expects the financing of oil extraction to fall faster than that of gas. Should the sustainability guidelines of the International Energy Agency (IEA) give rise to this, the bank will reduce fossil energy financing faster, according to the TERRA report.
ING, together with customers, wants to make the entire stock of €600 billion in loans more sustainable. This also fits the transition from fossil to renewable energy. In this way, a contribution must be made to achieving the objectives of the Paris Climate Agreement.
ING is one of the largest investors in oil and gas extraction in the Netherlands together with pension fund ABP. Institutional investors have suffered billions of losses over the past few months on their interests in oil companies. The stock prices of companies such as Shell, Exxon Mobil and BP plummeted by around 60 percent as a result of the coronacrisis combined with a historically low oil price.
See below the developments of Exxon Mobil, Shell and BP stock prices over the past five years.
The current crisis in the oil companies is so deep as it combines demand for fuels with low oil prices. As a result, both the departments that pump up oil and gas as well as the refineries that make products of them are losing. In particular, the failure in the demand for kerosene for aircraft leads to billions of losses in the large oil and gas companies.
DNB already warned
In the report “Safe behind the dikes”, the Nederlandsche Bank warned about the risk of investing in fossil energy a few years ago. Due to changes in the energy sector, banks, pension funds and insurers are at risk of serious depreciation of their interests in oil companies.
By 2050, the energy supply must be completely CO2 neutral and there will be almost no room for fossil energy sources. If oil companies dont make a big turn, they eventually lose their value.
There is a discussion about whether this process is already visible or whether there is a temporary dip in the oil and gas sector. Even during the last financial crisis, the stock exchange prices of oil companies plummeted, but then they resurrected.
BP expects to produce 40 percent less oil in the next ten years. The company will no longer drill in new countries and will increase investment in renewable energy tenfold. Shell is working on a major rethinking on the future and will announce new plans in the coming months. Exxon Mobil, on the other hand, seems to want to inflate much more oil according to Reuters, which relies on leaked internal documents from the American multinational.
While large Dutch investors such as ING carefully announce their departure from oil and gas, the Danish pension fund MP Pension has already completely said goodbye to the ten largest oil companies. According to the Danish Pension Fund, companies, including Shell, are not doing enough to meet Pariss climate targets. In Denmark, there are also doubts about the return that the oil companies will be able to achieve in the coming years.
Norways State Fund is also trying to reduce billions of investments in fossil energy at a rapid pace.