I would like to ask about “Table 4 Criteria per fossil fuel and financing type” in the FFF. For coal, the criterion is to reduce exposure, but for oil and gas, it is to reduce production. Is there any reason behind setting the target based on production for oil and gas?
Additionally, could the exposure criterion be applied to oil and gas in the same way it is for coal?
The reason we are considering this is because, if the target is based on production, even if financial institutions reduce their investments, oil and gas companies might increase production, which could make it difficult to achieve the target.
The Transition criterion of the Fossil Fuel Finance Targets method requires the reduction of absolute emissions related to oil and gas activities, which could be achieved in a number of ways (e.g., in terms of emissions intensity (as the “first-best” option), production, or exposure).
I would like to further inquire, if the worst-case scenario leads to the phase-out stage, could we also use these indicators to address the requirements for Existing financial flows in oil and gas activities?
I’m not sure I understand your question. The Transition criterion would be measured in terms of absolute emissions - a reduction in emissions intensity, production, or exposure should all result in a reduction in absolute financed emissions.
I understood about the Transition criterion. But I also have question in THE SBTi FOSSIL FUEL FINANCE POSITION PAPER Consultation Draft (June 2023).
There were some criteria for existing financial flows in “Table 4 Criteria per fossil fuel and financing type”. For instance, it mentioned in the article: For projects located in the wealthiest group of ‘producer nations’ (Group 1; Calverley & Anderson, 2022, Appendix 2), output of oil and gas needs to be cut by 74% by 2030, with complete phase out by 2034.
If FIs couldn’t get the output data from the oil and gas company, could FIs use "reduce exposure by xx% by 2030 " to reach these requirements?
The SBTi Fossil Fuel Finance Position Paper Consultation Draft was published for the purposes of seeking feedback. The relevant criteria to be used are in the FI Near-Term Criteria Version 2.0.
We encountered the same issue as Nonnon, and thank you for your discussion.
However, we found that “Phase out” criteria in FINT Version 2.0 only mention how to phase out coal projects and companies. Should the FIs that would like to phase out oil and gas projects and companies follow the same requirements as for coal? or is there a specific requirement for FIs financing oil and gas projects and companies that is still under consultation?
The criteria in the FI Near-Term Criteria Version 2.0 are minimum requirements. FIs are encouraged to go beyond these minimum requirements (e.g., phase out oil and gas projects and companies).