Our energy policy to support net zero transition
We’re committed to supporting and financing the transition to a secure net zero future.
Our updated energy policy has been developed in consultation with scientific and international bodies, and industry, and is informed by analysis of a range of pathways that, if followed, would help limit the global temperature rise to 1.5°C.
Together with our previously announced 2030 targets, the policy is an important mechanism for reducing the financed emissions of our portfolio of energy clients and helping to deliver decarbonisation.
The policy also emphasises our commitment to supporting clients who are taking an active role in the transition. We’ll engage closely with them on their transition plans, helping to finance and invest in the technologies and infrastructure needed to succeed in the transition.
Given the parallel urgency of today’s global energy crisis, we plan to accelerate our activities in renewable energy and clean infrastructure, aligned with our previously announced ambition to provide $750 billion to $1 trillion in sustainable finance and investment by 2030.
The need for an orderly transition
The updated policy covers the broader energy system, including upstream oil and gas, oil and gas power generation, coal, hydrogen, renewables and hydropower, nuclear, biomass and waste to energy sectors.
It seeks to balance three objectives: driving down global greenhouse gas emissions, the need to enable an orderly transition that builds resilience in the longer term, and the need to support a just and affordable transition.
In line with the policy, we will no longer provide new lending or capital markets finance for the specific purpose of projects pertaining to new oil and gas fields and related infrastructure when the primary use is in conjunction with new fields.
We will continue to provide finance or advisory services to energy sector clients at the corporate level, where clients’ transition plans are consistent with our 2030 portfolio-level targets and net zero by 2050 commitment.
The International Energy Agency’s 2021 Net Zero by 2050 report states that an orderly transition requires continued financing and investment in existing oil and gas fields to maintain the necessary output – with 2020 financing levels maintained through 2030 and declining to half thereafter.
We will therefore continue to provide finance to maintain supplies of oil and gas in line with current and future declining global oil and gas demand, whilst accelerating our activities to support clean energy deployment.
The importance of client engagement
Engagement on transition plans will be a vital part of our approach, to encourage and support clients to decarbonise and diversify their energy supply, production and business models. If a transition plan is not produced or if, after repeated engagement, is not consistent with our targets and commitments, we won’t provide new finance, and may withdraw existing financing if appropriate.
The policy supports an accelerated phase down of fossil fuel sources with the highest emissions intensity and greatest local environmental risks, with direct financing restrictions for the most emissions-intensive oil assets, and environmentally and socially harmful energy activities.
Our policy also recognises that oil and gas will follow different phase down curves in a 1.5°C pathway, with a steeper decline in the demand for oil. We’ll take this into account in our evaluation of clients’ transition plans.
Our policy also aims to help drive decarbonisation through the adoption of stringent methane mitigation standards and investment in carbon abatement technologies. We will also engage with clients on future production and capital investment plans.
In addition to the updated energy policy, we’ve also updated our thermal coal phase-out policy to include targets to reduce absolute on-balance sheet financed emissions from thermal coal mining by 70% by 2030, and 70% for thermal coal-fired power production. The updated thermal coal phase-out policy also prohibits finance for new metallurgical coal mines.
Read our updated energy policy in full.
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