ING has recently made significant announcements regarding its commitment to energy financing. The company has revealed its plans to completely phase out the financing of upstream oil and gas by the year 2040. Additionally, it aims to triple its renewable energy financing by 2025. These actions are aligned with the progress made at COP28 and the latest scientific insights and scenarios.
The decision to phase out financing of upstream oil and gas activities does not mean that ING will completely exit the oil and gas industry. Instead, the focus is on the exploration and production of oil and gas, which is a crucial part of the oil and gas value chain. By 2040, ING’s lending to exploration and production of oil and gas will be reduced to zero. The company also has emissions intensity targets for midstream and downstream operations, with the goal of reaching net-zero emissions by 2050.
This new commitment builds upon ING’s actions from the previous year, where dedicated finance for new oil and gas fields was stopped and financing for related infrastructure was restricted. The company’s updated renewables target is to triple the financing of renewable power generation to €7.5 billion annually by 2025, replacing the previous target of increasing renewables financing by 50% by 2025 from the €1.5 billion base in 2021.
The decision to take these steps now is a result of ING’s efforts to align its upstream oil and gas portfolio with the goals of the Paris Agreement. The company has been using scenarios by the International Energy Agency (IEA) and has committed to updating its approach in line with any new IEA scenarios. The recent publication of an update by the IEA, including a ‘NZE scenario for Advanced Economies’, has influenced ING’s decision to further adjust its approach.
Although the company is transitioning towards a more sustainable energy portfolio, it acknowledges the continued need for fossil fuels to remain affordable and secure. ING recognizes that approximately 80% of the energy used globally is fossil-fuel based, and there are still essential uses for fossil fuels in various industries. Therefore, the focus is on balancing decarbonisation efforts with the practical needs of the global energy supply.
It is important to note that the transition to a low-carbon economy, both for ING and its clients, is a gradual process. The company’s commitment to increasing renewable energy financing aligns with the guidance provided by the IEA, which emphasizes the importance of a significant expansion of renewable power generation to meet net-zero goals. Ultimately, the best way to reduce the demand for fossil fuels is to increase the availability of renewable energy.
As for companies that are involved in upstream activities as well as other operations, ING will develop an approach similar to the rationale applied for utilities companies when phasing out coal-fired power plants. The company’s policy is to not finance utility clients that are over 5% reliant on coal-fired power in their energy mix. However, ING will continue to finance non-coal energy projects for these clients in support of their energy transition.
In conclusion, ING’s commitment to energy financing represents a significant step towards a more sustainable future. By phasing out financing for upstream oil and gas activities and significantly increasing its support for renewable energy, the company is making strides towards aligning with global climate goals and facilitating the transition to a low-carbon economy. These actions reflect ING’s dedication to responsible and ethical financial practices in the energy sector.
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