Twelve banks, among which Barclays, BNP Paribas, Commerzbank and Citibank, have recently granted it a massive \u20ac5.5 billion euros loan to Finnish group Fortum. Designed as a general corporate loan, it could be partially directed towards Fortum\u2019s German subsidiary Uniper. This calls into question the banks’ commitments, especially considering that eleven of these institutions are part of the Net Zero Banking Alliance. Indeed, Fortum\/Uniper is currently developing new gas power plants and a liquefied natural gas (LNG) terminal in Germany, which conflicts with the recommendations of scientists to limit global warming to 1.5\u00b0C. Fortum\/Uniper’s coal exit strategy has long been lacking, and is now becoming increasingly sketchy. The group still plans to exit coal in Germany in 2038, regardless of the German government\u2019s wish to bring it forward to 2030, and has taken legal action against the Dutch state to challenge its coal phase out. Now, Fortum\/Uniper is also planning to sell its Russian coal assets instead of closing them, exposing them to long-term use.<\/p>\n<\/div> Not only is Fortum\/Uniper in no hurry to get out of coal, but the utility is also increasingly relying on fossil gas. Yet, the International Energy Agency’s (IEA) conclusions to limit warming to 1.5\u00b0C are clear: all fossil fuel power plants not equipped with capture devices must be closed by 2035 for EU\/OECD states and\u00a0 the volume of global LNG trade must be reduced past mid-2020.<\/p>\n But, despite the scientists\u2019 recommandations, fossil gas already accounts for 47% of Fortum\/Uniper\u2019s electricity production in 2021, and the group is currently building two new gas units in Germany. These developments are in addition to a European gas power plant fleet that is already the largest emitter in the European electricity sector, and threatens to be used over their entire lifespan, which typically reaches over 30 years.<\/p>\n In parallel, the group has recently begun construction of Germany\u2019s first LNG terminal in Wilhelmshaven. But the European Union\u2019s current gas problem is not the lack of import capacities but the tightness of global gas markets (1), and its member states can exit Russian gas by 2025 without any new fossil fuel infrastructure (2).<\/p>\n<\/div> BNP Paribas and Barclays were both lenders and lead arrangers for this \u20ac5.5 billion loan which was approved at the end of June 2022. While 11 out of the 12 banks involved in this deal have committed to the 1.5\u00b0C target as members of the Net Zero Banking Alliance, this transaction seems to illustrate the shortsightedness of banks in assessing the transition plans of their corporate clients. Fortum\/Uniper\u2019s banks must include specific requests regarding the group’s transition strategy when granting financial support, otherwise they will fall into false solutions and miss their own climate goals.<\/p>\n<\/div>
\n<\/b><\/span><\/p>\n<\/div><\/div><\/div>Fortum\/Uniper\u2019s increasingly sketchy coal phase-out strategy\u2026<\/h1><\/span>
And growing dependence on fossil gas<\/h1><\/span>
Banks’ climate commitments undermined by this new financing<\/h1><\/span>