Photo: ING Cedar Office in Amsterdam; Source: ING; Photo ©Egbert de Boer

Dutch bank to curb financing for oil & gas projects while pushing for renewables

Dutch banking and financial services corporation ING has decided to step up its renewable energy efforts and restrict financing for new oil & gas fields as part of a push to facilitate the energy transition.

Dutch bank ING
ING Cedar Office in Amsterdam; Source: ING; Photo by ©Egbert de Boer (under the CC BY-NC-ND 2.0 licence)

The announcement is part of ING’s Terra approach to steer its portfolio towards keeping the rise in global temperatures to 1.5 degrees Celsius to achieve net-zero by 2050.

Over the years, ING has worked to build a power generation lending book that is 60 per cent renewables, claiming this outperforms by far the most ambitious climate goal of the Paris Agreement.

Now, ING goes a step further by announcing its aim to grow new financing of renewable energy by 50 per cent by year-end 2025 and no longer provide dedicated finance to new oil & gas fields. According to Reuters, with this decision, ING became the biggest bank yet to take such a step.

ING explained in a statement on Wednesday that these steps are aligned with the ‘Net-Zero Emissions by 2050 Roadmap’ by the International Energy Agency (IEA). Massive investment is needed in clean energy and infrastructure, which will then lead to a decrease in demand for fossil fuels, according to the roadmap. That reduced demand should be met by existing oil and gas fields, which means that in both the IEA’s and ING’s view, no new fields should be needed, the Dutch bank said.

These steps also support the European Union’s ‘Fit for 55’ and ‘REPowerEU’ plans. Other key elements there include oil and gas supplies from existing fields, investments in clean energy and infrastructure for the electrified economy, and energy efficiency.

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“The best way to reduce dependency on fossil fuels is to make sure there are enough affordable green alternatives available,” said Michiel de Haan, head of ING’s energy sector. “These steps support that and show we’re serious about putting our financing to work to facilitate the energy transition.”

In developing its energy strategy, ING balances three key interests: the need to decarbonise to fight climate change, the need for energy to remain affordable for people and companies, and the need for security of the energy supply.

According to the bank, the steps announced on Wednesday follow a path it embarked on years ago. Looking at its power generation portfolio, the bank pledged in 2017 to exit coal-fired power plants by 2025 and has since then decreased its exposure by 80 per cent. At the same time, it more than doubled its financing of power generation from renewable energy sources such as solar and wind, which now makes up almost 60 per cent of its power generation portfolio.

Source: ING

The latest restriction refers to dedicated upstream finance (lending or capital markets) for oil & gas fields approved for development after 31 December 2021. At the same time, ING will continue to provide financing to clients active in keeping oil and gas flowing, in line with efforts to keep energy secure and affordable during the low-carbon transition.