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The French central bank will reduce its exposure to the oil and gas industry over the next four years as part of efforts to redirect its resources to more renewable energy projects, Reuters has reported, citing a statement by the bank.
By 2024, the bank will stop lending money to companies that source more than a tenth of their revenues from oil and 50 percent from gas. From this year, the Bank of France will no longer lend to shale oil and gas developers as well as companies with Arctic or deepwater projects on their books.
At the same time, the Bank of France will start acting as an activist shareholder in oil and gas companies, saying it will vote against new fossil fuel projects proposed by companies where it holds a stake.
The Bank of France also said it will reduce lending to the coal industry by suspending investments in companies that generate more than 2 percent of their revenues from coal. At the moment, the bank lends to companies that generate up to 10 percent of their revenues from coal. By 2024, the Bank of France will pull out of all companies that generate any amount of revenues from coal.
The French central banker is the latest to join a growing group of lenders signaling they are getting increasingly unwilling to do business with the fossil fuel industry amid a rush by governments and the private sector to set ambitious emission reduction targets in line with the Paris Agreement on Climate Change.
All the top Wall Street lenders last year declared they would no longer be financing Arctic oil and gas exploration, which turned out to be a little redundant since the oil and gas industry itself is not particularly enthusiastic about Arctic exploration at current oil prices and demand prospects.
Pressure on oil and gas companies is also increasing from shareholders demanding that they become more serious about their carbon footprint and pressing them to report emissions.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com