Mark Carney should call a moratorium on new fossil fuel investments – or resign as UN Climate Finance Envoy

The climate column: Carney’s dual role with the UN and UK makes it almost impossible for him – as the UN Climate Finance Envoy – to publicly call out on the hypocrisy of the UK as Cop26 President

Donnachadh McCarthy@DonnachadhMc
Thursday 25 March 2021 14:45
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<p>‘Carney has said that owning renewables did not wipe out the carbon emitted by their fossil fuel holdings – but this raises crucial questions’</p>

‘Carney has said that owning renewables did not wipe out the carbon emitted by their fossil fuel holdings – but this raises crucial questions’

Can Mark Carney, former governor of the Bank of England, be both a leading climate finance negotiator – and an oil sands and coal private equity senior executive?

The reason I pose this question is because Carney, as UN Climate Finance Envoy, is one of the most powerful people overseeing negotiations on climate finance in the lead up to November’s UN’s Climate Summit, Cop26.

Unless CoP26 agrees an immediate moratorium on new fossil fuel investments, it will be almost impossible to avoid civilisational collapse, as the UK Environment Agency chair, James Bevan, has already warned.

Carney gained praise as governor of the Bank of England for raising the role of central banks in relation to the climate emergency – and leading international efforts to introduce carbon disclosure by the private sector. He also supports achieving “net zero” climate finance by 2050.

But there’s a huge flaw in this policy: many banks and fossil fuel corporations have already committed to net-zero 2050, but this transparency has not stopped their plans to invest in new coal, oil and gas expansion throughout the next decade.

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The IPCC says to avoid breaching the agreed upper limit of a dangerous 1.5C rise in global temperatures, we cannot burn more than a twelfth of existing reserves, never mind burning ever larger reserves.

Following Carney’s departure as governor, the Bank of England released a review of its own investments and found that they were in line with a disastrous 3.5C rise in global temperatures.

So, whilst Carney was accruing accolades for climate leadership, the Bank of England was – in a de facto sense – supporting the fossil fuel economy.

He recently stated that his ambitions for Cop26 were to ensure financial institutions assess credibility of transition plans, measure alignment of portfolios with transition to net zero and commit to net zero.

But Sandrine Dixson-Decléve, co-president of the Club of Rome, told me: “Multi-lateral development banks across the globe should follow in the European Investment Bank’s (EIB) footsteps and pull out of fossil fuel investments this year. It is about time that Public Finance Institutions shift capital to transform our energy systems to match the Planetary Emergency at hand.

This entails setting a moratorium on perverse fossil energy subsidies and fossil fuel investments as well as tripling annual investments in renewables and energy efficiency across the globe.”

Last month, Carney boasted that the Brookfield Asset Management, of which he is vice-chair, had already achieved “net-zero”. But when researchers from Unearthed examined Brookfield’s investments, they found that whilst it did have considerable renewable energy investments, it also had billions invested in oil-sands, coal and fossil gas.

Carney said that owning renewables did not wipe out the carbon emitted by their fossil fuel holdings – but it raises crucial questions:

Why is Carney not following the EIB and calling for a Cop26 moratorium on all new fossil fuel investments as the minimum negotiation starting point?

Why do his proposals instead allow for continued investments in new fossil fuels until 2050 – and why are they aligned with the declared existing “2050 goals” of many fossil-fuel corporations and their bankers?

But Carney’s potential conflicts of interests go deeper. He is not only the UN Climate Finance Envoy, but was also appointed Climate Finance Adviser to the UK Prime Minister for Cop26.

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The City of London is one of the world’s largest sources of fossil fuel finance. But Carney’s dual role with the UN and UK makes it almost impossible for him as the UN Envoy to publicly call out on the hypocrisy of the UK as Cop26 President, for refusing to impose a moratorium on its own substantial new fossil-fuel investments.

I asked the UN Secretary General Antonio Guterres why he was keeping Carney in post and got this reply from his spokesperson: “Mark Carney, first as Governor of the Bank of England and now as Special Envoy, has contributed greatly to bringing climate action into the heart of the financial decision making.

His work to ensure that private finance supports the transition to net zero is critical to achieving our climate objectives and the Secretary General continues to support these efforts.”

I also asked Carney’s own spokesperson two questions: “How can he speak independently on behalf of the UN, which should be calling for an immediate moratorium on new fossil fuel investments, when he is compromised by being simultaneously the adviser to the UK prime-minister?

“How would he answer allegations that the reason the UN is not calling for an immediate moratorium on new fossil fuel investments, is because it is compromised by a UN Climate Finance envoy, whose reported conflicts of interests could lead to the appearance that it has potentially led them to fail to pro-actively urge the UN to support such a moratorium?”

Carney’s private office failed to provide a response – but a UK government spokesperson told me: “Mark Carney is working to build a more sustainable financial system to support the path to global net zero and embed climate into every financial decision.” They added that Carney’s independent roles had been properly declared.

But if saddled with too many potential conflicts of interests, surely Guterres should ask him to resign.

This role needs to held by somebody who has a positive track record on implementing moratoria on new fossil fuels, such as Werner Hoyer, president of the EIB. With civilisation hanging in the balance on the Cop26 negotiations, nothing less will do.

This article was amended on 29 March 2021 to refer to Werner Hoyer as president of the EIB. It previously referred to Christine Lagarde, who is president of the ECB.

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