In May 2020, Reclaim Finance publishes a report revealing that the European Central Bank’s corporate asset purchases significantly finances all fossil fuels. based on its study of the ECB’s list of corporate holdings (CSPP and PEPP), Reclaim Finance shows that quantitative easing strongly benefits to firms from the most polluting sectors (fossil fuels, air and automobile sectors…).
Titled “Quantitative easing & climats: The ECB’s dirty secret”, the report shows that the principle of market neutrality leads the ECB to support companies, which because of their massive activities in the fossil fuel sector, are a stumbling block for the EU to achieve its own climate targets.
Reclaim Finance calls on Christine Lagarde and the Eurosystem governors to put an end to asset purchases of fossil fuel companies.
The main points of the report
- For several years, and even more today in the context of the Covid-19 crisis, the ECB massively uses quantitative easing to fulfill its missions. With the Eurosystem banks, it held 2783 billion euros in assets at the end of March 2020 and planned on buying 1100 billion in a single year.
- 63% of the ECB’s corporate asset purchases go to high-carbon emitters, and the asset purchases decided in response to the Covid-19 pandemic alone could finance high-carbon emitters to up to 132 billion, therefore crushing hopes for a “green recovery”.
- The ECB bought assets from 38 fossil fuel corporations. Of these corporations, 10 are active in the coal sector for a total installed power capacity of 66 000 MW, more than all of the French nuclear reactors.
- Major oil and gas companies, including Shell and Total, that plan on increasing their productions respectively by 38% and 12% from 2018 to 2030, are on the list of assets bought by the ECB. Shell’s case is especially problematic. It is one of the 4 enterprises of the ECB’s portfolio active in shale oil and gas and could multiply its production in the area by 12.
Methodology: Data originates from the ECB and concerns assets held by the central bank under the Corporate Sector Purchase Program (CSPP) and the Pandemic Emergency Purchase Program (PEPP) on April 17, 2020. They were compared to information from the Global Coal Exit List, the Global Coal Plant Tracker and Rystad Energy – provided by the NGO Oil Change International – and supplemented with additional research on energy companies.