Since the Paris Agreement was signed in 2015, the world is becoming less and less likely to meet its goals. Emissions must now be halved by the end of this decade to avoid the worst effects of the climate crisis.
Aligning financial flows and services with this path is essential not only for the planet, but for the financial sector itself.Munich Re, the world’s largest reinsurer, has a new policy Last month excludes oil insurance and reinsurance.
As of October, 41 insurers, including industry giants such as Allianz, Munich Re and Swiss Re, represented 39% of the primary market and 62% of the reinsurance market, withdrawing or reducing coal coverage doing. For oil and gas, these figures now reach 38% of the reinsurance market and 15% of the primary insurance market. Coal companies are now facing higher premiums of up to 40%, reduced coverage and longer searches to access insurance.
But insurers and reinsurers need to act faster. For example, Lloyd’s of London announced in 2020 that it would stop insuring fossil fuel projects by 2030. However, last year Lloyd’s issued guidance suggesting that this policy is voluntary for agencies. Many other insurers continue to insure new oil and gas projects, ignoring climate science and evidence, according to global campaign group Insure Our Future.
As Russia’s war on Ukraine continues, the fossil fuel industry sees an opportunity to build new infrastructure around the world. Revenue-hungry governments are willing to give in to promises of quick returns and open the doors to these companies.
However, insurers must remain vigilant. Supporting oil and gas investments will only get more and more dangerous.
One of the riskiest investments currently offered is the Democratic Republic of the Congo (DRC). In July, it auctioned exploration rights for 30 oil and gas blocks in an area of approximately 277,000 square kilometers (106,950 square miles).
Parts of the block overlap protected areas, including the World Heritage Virunga National Park, which is threatened by armed conflict and the prospect of current drilling. It is home to his 3,000 species of animals, including the Batwa and other communities that face violence and discrimination, as well as the endangered Eastern he gorilla.
The other block is located in the Cuvette Centrale peatlands and acts as a sink storing about 30 gigatonnes of carbon. That’s his three-year global emissions from fossil fuels.
Simon Lewis, a professor at the University of Leeds and head of a British-Congolese research group called Congo Peat, calls the DRC Block “the worst place to drill for oil in the world.” Lewis warns that there may be no substantial oil reserves beneath Congo’s forests, and even if there were, it would be economically uneconomical to bring them from extremely remote areas to world markets. However, even if exploration does not find commercial-scale oil fields, it would still seriously damage rainforest biodiversity.
Beyond the Democratic Republic of the Congo, Russia’s war in Ukraine and rising energy prices are among the triggers of a renewed scramble for fossil fuels across Africa, from Senegal to Namibia to Uganda.
The International Energy Agency (IEA) says that if the world is to reach net-zero emissions by 2050, it will need to completely ban all new fossil fuel investment. IPCCthe United Nations Panel of Experts on Climate Change.
This prescription is especially important for Africa, where oil production is often more carbon-intensive than elsewhere. This equates to about 40% more carbon dioxide per barrel.
Africa and the broader global South are often the worst victims of climate change. Nigeria reported that floods displaced nearly 800,000 of her people in October and killed 500. deal with The aftermath of devastating floods that have drowned a third of the country. In Somalia, drought after two years of historic drought has forced one million people from their homes. And the list goes on.
The new competition for fossil fuels will also have devastating consequences for human rights. Exploration and drilling rights are granted in a way that sacrifices the natural ecosystems that have served local and indigenous communities for centuries. The community was not even notified.
Insurance companies have enormous power to force change. Without insurance, most new fossil fuel projects cannot continue and existing projects have to end. Ending insurance for new oil, gas and coal projects is imperative, as demanded by the Insure Our Future coalition, which ranks the world’s top insurers based on their fossil fuel elimination policies. We are also phasing out support for existing projects and allowing insurers to remove all assets from coal, oil and gas companies that are not on track to limit global temperature rise to 1.5 degrees Celsius (2.7 degrees Fahrenheit). is also important to sell.
Finally, insurers must maintain robust due diligence and verification mechanisms to ensure that their clients fully respect and comply with all human rights.
This is not only essential for the world, but also a smart business strategy for insurers. Projects in the Democratic Republic of the Congo and other fragile ecosystems could be the worst insurance policies in the world. They are best avoided—for everyone.
The views expressed in this article are those of the author and do not necessarily reflect the editorial attitude of Al Jazeera.
https://www.aljazeera.com/opinions/2022/11/8/oil-and-gas-the-worst-deals-in-the-world-to-insure Fossil fuels are the worst insurance policy in the world. Here’s why.business and economy