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. On Friday, Bank of France Governor Francois Villeroy de Galhau called on the ECB to incorporate climate change into its economic models within five years.
That is too slow for Reclaim Finance, with such a three-to-five-year window “very worrying” given the Bank of France is seen as a leading force on environmental reform, said Paul Schreiber, a campaigner at the group.
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, after the Bank of England faced similar criticism last month. 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.”
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.
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.