The UN-convened Net-Zero Asset Owner Alliance (AOA) [1] today issued its long-awaited position paper on oil and gas [2]. In striking contrast to an earlier draft of this paper, the final version fails to directly acknowledge that there is no room in feasible 1.5\u00b0C scenarios for investments in new oil and gas projects. It requires no actions from its members that would put meaningful pressure on the oil and gas producers and major consumers that they invest in. It only weakly calls on its members to increase support for clean energy. Reclaim Finance believes that the AOA is failing to meet its stated goal of aligning asset owners to 1.5\u00b0C and calls on individual alliance members to take robust action on their own to pressure the oil and gas industry.<\/span><\/b>\u00a0<\/span><\/p>\n<\/div> Reclaim Finance obtained a draft copy of the position paper from 2022. This clearly stated that the AOA accepted the conclusions of both the IEA\u2019s <\/span>net-zero scenario<\/a><\/span> and the AOA-financed <\/span>One Earth Climate Model<\/a><\/span> (OECM) that there is no room in feasible 1.5\u00b0C scenarios for investments in new oil and gas projects. The final version of the paper is, however, an almost complete rewrite of the earlier draft. While the AOA still claims to be guided by the IEA and OECM, all meaningful references to ending investments in new oil and gas infrastructure have been taken out of their paper [3].<\/span>\u00a0<\/span><\/p>\n The earlier draft included clear language on ceasing investments in new upstream, midstream and downstream oil and gas infrastructure. [4] The new Executive Summary instead contains a simple request for oil and gas companies to: \u201cPractice discipline in all infrastructure financing decisions in alignment with emissions targets and 1.5\u00b0C scenarios.\u201d There are no requirements for AOA members in the paper which would be likely to meaningfully impact the business plans of the oil and gas companies in which the AOA\u2019s members invest [5].<\/span>\u00a0<\/span><\/p>\n The oil and gas paper comes just over a week after the IPCC\u2019s synthesis report noted the \u201c<\/span>rapidly closing window of opportunity to secure a livable and sustainable future for all.\u201d<\/span> The IPCC stated that \u201cCO2 emissions from existing fossil fuel infrastructure without additional abatement would exceed the remaining carbon budget for 1.5\u00b0C.\u201d [6]<\/span>\u00a0<\/span><\/p>\n<\/div><\/div><\/div> This paper makes the AOA<\/span> look<\/span> more aligned with Big Oil than it is with net zero<\/span>. <\/span>The alliance<\/span> claims to be committed to halving emissions by 2030 but <\/span>is not prepared to <\/span>set actions for its<\/span> members <\/span>that might<\/span> put that goal within reach<\/span>.<\/span> Coming so soon after the IPCC\u2019s <\/span>hard-hitting<\/span> message<\/span> only highlights <\/span>th<\/span>e AOA\u2019s <\/span>failure of leadership<\/span>. <\/span>If leadership is to be found among <\/span>asset owners <\/span>it looks like it will need to be at <\/span>the level of individual members<\/span>: while the AOA fiddles<\/span>,<\/span> it is time for its members to act<\/span>.<\/span><\/span><\/em><\/p>\n<\/div> Lucie Pinson, director of Reclaim Finance <\/span><\/span><\/strong><\/p>\n<\/div><\/div><\/div> A number of AOA members, all French, have adopted moderately strong policies on oil and gas expansion, most notably SCOR and MAIF, but also including CNP Assurances, Groupama, MACIF and Abeille Assurances [7].<\/span>\u00a0<\/span><\/p>\n Like the other GFANZ alliances, the AOA is a partner of the UN Race to Zero Campaign, and as such is supposed to align with the <\/span>RTZ\u2019s criteria<\/a><\/span>. These criteria require net-zero aligned financial institutions and companies to develop transition plans which should explain what actions will be taken to ensure the phasing out of the \u201cdevelopment, financing, and facilitation of new unabated fossil fuel assets\u201d [8]. Similarly the UN\u2019s <\/span>High-Level Expert Group on net zero<\/a><\/span> \u2013 of which AOA chair G\u00fcnther Thallinger was a member \u2013 recommended that financial institutions must commit to ending investments in support of new oil and gas fields, and expansion of oil and gas reserves [9].<\/span>\u00a0<\/span><\/p>\n<\/div><\/div><\/div> This<\/span> oil and gas <\/span>position <\/span>paper is a great leap backward for <\/span>the <\/span>AOA<\/span>. <\/span>In 2020 the <\/span>alliance<\/span> was prepared to <\/span>state <\/span>in a coal position paper that <\/span>\u201cno further coal plants should be financed.\u201d Yet more than three years later, <\/span>with the climate crisis steadily tightening its <\/span>deadly<\/span> grip,<\/span> the AOA <\/span>has run away from <\/span>taking <\/span>a<\/span> clear position on <\/span>financing <\/span>oil and gas<\/span> expansion<\/span>.<\/span> The AOA <\/span>address<\/span>es <\/span>many of its recommendations <\/span>to governments, companies, and investors in general, <\/span>instead of<\/span> focus<\/span>ing<\/span> on <\/span>the responsibilities of its own members<\/span>.<\/span><\/span> Pa<\/span>ddy<\/span> McCully, <\/span>senior analyst with Reclaim Finance<\/span><\/span><\/span><\/span><\/strong><\/p>\n<\/div><\/div><\/div> As in the rest of the text, the recommendations for its members\u2019 engagements with oil and gas companies have also been watered down from the draft \u2014 where they were already weak. The final version is loaded with non-binding suggestions for vague actions such as: \u201cA case in point might be electing not to fund the most carbon-intensive oil and gas production\u201d; \u201cInvestors may opt to intentionally allocate more heavily toward the most \u2018transition ready\u2019 companies\u201d; \u201cInvestors are encouraged to invest in projects and technologies targeted at the expansion of low- or zero carbon energy\u201d.<\/span>\u00a0<\/span><\/p>\n<\/div><\/div><\/div>
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