ECB Aiding ‘Climate Chaos’ Through Emergency QE, Campaigners Say

The European Central Bank’s emergency stimulus program is endangering the region’s climate-change objectives by “feeding a natural gas frenzy,” according to environmental campaigners.

The central bank is buying bonds from fossil-fuel project developers including Royal Dutch Shell Plc, Total SE and Engie SA, Paris-based Reclaim Finance said in a statement.

$69.​9B Renewable power investment worldwide in Q2 2020 52% Carbon-free net power in Germany, most recent data 0 3 2 1 0 9 0 2 1 0 9 8 0 7 6 5 4 3 Soccer pitches of forest lost this hour, most recent data -37.​41% Today’s arctic ice area vs. historic average

Lucknow, IndiaMost polluted air today, in sensor range 0 6 5 4 3 2 0 3 2 1 0 9 0 4 3 2 1 0 .0 0 9 8 7 6 0 7 6 5 4 3 0 8 7 6 5 4 0 2 1 0 9 8 0 2 1 0 9 8 0 9 8 7 6 5 Parts per million CO2 in the atmosphere +0.​92° C Jul. 2020 increase in global temperature vs. 1900s average

50,​820 Million metric tons of greenhouse emissions, most recent annual data

It’s the latest sign of tension between the need to help economies during the coronavirus pandemic and longer-term ambitions to tackle global warming. European leaders have said that they want the region’s recovery from the crisis to be a green one.

“The ECB must immediately exclude corporations whose practices are incompatible with the Paris Agreement from its asset purchases, starting with companies that develop new fossil fuel projects,” Reclaim Finance said, urging the central bank to “stop contributing to climate chaos.”

A spokesman for the central bank pointed to comments by ECB President Christine Lagarde in December, when she cautioned that assessments of the carbon intensity of entire economic sectors can be misleading. Lagarde also said climate change was an urgent and major challenge.

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The criticism comes as governments burnish their green finance credentials, with Germany racking up near-record demand in its debut green bond offering on Wednesday, following a similar move by Sweden earlier in the week.

Reclaim Finance said the ECB was avoiding climate-change reforms by referring to a “strategy review” that may not have any effect before 2022. Through its QE program the ECB supports 11 companies that plan to develop 62 new fossil fuel projects, the group said.

Shell, Total and Engie declined to comment on the report. Shell’s Chief Executive Ben van Beurden said in July the company would “put disproportionate growth into the transition,” which includes liquid natural gas as well as petrochemicals and power, while Total has also set plans to reduce its carbon intensity.

The ECB has announced an extra 1.35 trillion euros ($1.6 trillion) of bond purchases for the pandemic program, to be carried out by the end of June 2021. It has also pledged to do more if needed.

ECB Executive Board member Isabel Schnabel said in July that the central bank held around 20% of green corporate bonds eligible for its purchase programs, and was being “environmentally mindful” in its pension fund investments.

The Bank of England faced similar pressure in August to revise its pandemic rescue program, after research showed it’s effectively subsidizing polluting industries while saying tackling climate change is a priority.

— With assistance by Jana Randow, Laura Hurst, and Francois De Beaupuy

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