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European governments are suspending plans to drop fossil fuel projects but many big banks fear reputational damage if they raise finance for them
Environmental activists are stepping up efforts to dissuade banks and insurance companies from supporting the $5 billion East African Crude Oil Pipeline (EACOP) project, due to run 1,443 kilometres from the oil rigs near Lake Albert in Western Uganda to Tanga Port, Tanzania, on the Indian Ocean. At stake are Uganda's long-delayed plans to build an oil industry to serve the region and international buyers.
The pipeline is backed by France's TotalEnergies and the China National Offshore Oil Corporation (CNOOC) and is expected to generate more than 33 million tonnes of carbon emissions a year.
Many European economies, seeking alternatives to Russian gas supplies, are suspending their plans to divest from fossil fuel projects. But it may still prove difficult to raise finance for the pipeline. Coordinated campaigns against fossil fuel projects are hitting harder despite the worsening international energy crisis.
The Bureau of Investigative Journalism and London's Financial Times reported on 19 May that Marsh McLennan, the world's biggest insurance broker, won the contract to find insurers for the project despite a letter signed by 100 Marsh employees warning of its 'disastrous consequences' for the climate. In a letter the employees asked: 'Will clients trust us to provide climate risk management if they know we also support projects which worsen these very risks?'
Similar campaigns have gained traction across the wider financial services sector. Major banks including Deutsche Bank, JPMorgan Chase, Citigroup, Wells Fargo and Morgan Stanley are said to have ruled out any financing role in EACOP. A growing list of insurers, including Zurich, Axa and Swiss Re have already distanced themselves from the project.
Prince Papa, Africa coordinator of the Laudato Si' Movement, a Catholic climate charity, said: 'if there is no insurance of these investments then this project is dead. It will only remain on paper.'
Tanzania's National Environmental Management Council has accused western activists of conducting a 'smear campaign'. TotalEnergies, which has been trying to rebrand itself as a leading promoter of green energy, has promised to mitigate any ecological damage caused by the pipeline.
Environmental and Social Impact Assessments of the project have identified vague risks associated with loss of biodiversity and negative impact on livelihoods. But critics complain the assessments have taken little account of the risk of oil spills and the pipeline's contamination of water (AC Vol 62 No 12, Pipeline may go nowhere and AC Vol 61 No 21, Leaders seek poll boost from pipeline deal).
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