25

Jun

2021

Pressure grows on the oil industry with Dutch court ruling and IEA energy report

 

In recent weeks, several major developments have taken place which have important implications for the fossil fuel industry and divestment.

Last month, a Dutch court ruled that Shell must almost halve its emissions by 2030, in a judgment that sent shockwaves through the fossil fuel industry. It came soon after an unprecedented report from the International Energy Agency (IEA), which concluded that new oil and gas exploration and development must end this year if we are to limit global average temperature rises to 1.5°C. Together with urgent calls from across the global South, the news adds to the moral case for divesting from fossil fuels.

These developments arrived on the heels of a major study by the World Meteorological Organization (WMO) which showed there is a 40% chance of at least one of the next five years being 1.5°C hotter than the pre-industrial level. The risk of tipping points is imminent, reminding us once again, that the time to act decisively is now.

In 2021, many UK Churches have taken the important step of fully divesting from fossil fuels, including the Baptist Union, Church in Wales and the Church of Scotland.

The Methodist Church, one of the latest to divest, cited the slow pace of change by the oil companies. David Palmer, Chief Executive of the Central Finance of the Methodist Church, which oversees £1.3 billion of investments, said: ‘The patience of the Church has run out.’ He added: ‘The pace of change across the oil and gas sector has been inadequate and we welcome the recommendation of JACEI to disinvest.’ The Methodist Church has sold almost £21 million in shares in Shell.

This means that only the Church of England, Catholic Church and the Scottish Episcopal Church continue to hold shares in fossil fuels. Some dioceses have made the decision to divest, including 2 out of 42 dioceses in the Church of England and 4 out of 22 Catholic dioceses in England and Wales.

The case for continuing to hold investments in Shell has come under particular scrutiny in recent weeks, given its plans to increase gas production by 20 per cent in the next few years.

Last month, a Dutch court ruling ordered Shell to ensure that its net carbon emissions were 45 per cent lower in 2030 than in 2019. This ruling, the first of its kind, shows that the oil company’s net zero ‘ambitions’ are not adequate to align with the goals of the Paris Climate Agreement.

The court ruling against Shell came just a few days after the Shell AGM, in which the Church of England Pensions Board voted with the oil giant to pass the company’s new energy transition plan. The Church Times reported that Shell’s new strategy involves plans to seek out new fossil-fuel reserves for years to come. The company said: ‘We have attractive exploration opportunities in the first half of this decade.’

On the same day as the Shell AGM, the International Energy Agency (IEA) gave its strongest warning yet on the need to drastically scale back fossil fuels. The IEA released a report stating that the exploitation and development of new oil and gas fields must stop this year if the world was to reach net-zero emissions by 2050 – a goal of the Paris Agreement.

A vigil was held by Christian Climate Action outside Church House on the day of the Shell AGM, to pray for the Church Commissioners and the Church of England Pensions Board to stop investing in Shell and to invest instead in funds that promote the common good.

There are also many calls from the global South for the Church of England to move away from fossil fuels, in solidarity with communities suffering from the activities of the fossil fuel companies. A coalition of 41 Nigerian civil society organisations wrote an open letter to the Archbishop of Canterbury and Church investors, asking them to oppose Shell’s climate transition strategy.

The letter reads: ‘We are extremely disappointed and concerned to see that the Church of England Pensions Board is lending its moral and financial authority to Shell, and plans to vote for Shell’s climate and energy plan at its 2021 annual meeting. We urge you to use all the tools available to you to encourage all parts of the Church of England to challenge Shell, rather than champion the corporation’s climate and energy plan.’

It continued: ‘It is not acceptable for the Church to sign off on a Shell plan for this decade that makes no absolute carbon emission reduction pledges, includes huge increases in gas production, and relies on improbably large amounts of tree-planting.’

The Bishop of Nampula, in Northern Mozambique, the Rt Revd Ernesto Manuel, wrote last month: ‘Fossil fuel investments increase climate change and impacts on those most vulnerable, and also destabilise communities… We plead with the international community – take your money out of fossil fuels and invest in renewable energy which is decentralised, benefits local people, and does not contribute to climate change.’

Unfortunately, despite these urgent calls, the Church of England Pensions Board voted with the oil giant Shell to pass the company’s new energy transition plan.

Writing in response to the decision by the Pensions Board, Revd Dr Rachel Mash, Environmental Coordinator of the Anglican Church of Southern Africa (Green Anglicans) said: ‘The profits that the Church of England will make…come at the cost of human-rights abuses, trampling of the rights of indigenous people, environmental degradation, and pollution of water sources.’

In this crucial year for climate action, Churches need to divest from fossil fuels, in order to speak out with integrity on the climate crisis. As the risk of stranded assets continues to grow, many are concluding it is also the prudent financial choice.

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