A senior executive at J.P. Morgan Asset Management is telling clients that global carbon reductions aren’t moving nearly fast enough—just as a coalition of climate organizations identifies his employer’s parent company, JPMorgan Chase, as “the world’s worst banker of climate change”.
On Monday, Michael Cembalest, the asset management company’s chair of market investment and strategy, issued an annual energy outlook report that calls on the U.S. to significantly speed up its emission reductions, while warning that some rapid decarbonization advocates are downplaying how difficult the transition will be.
“People are not getting the full picture about what’s feasible,” he told Bloomberg Tuesday. “I think more sacrifices are going to be needed than people still understand.”
The analysis “starts by pointed out that even if the world succeeded at generating all its electricity from zero-emissions sources, such as renewable energy or nuclear power, electricity makes up less than one-third of fossil fuel consumption,” Bloomberg writes. “Much harder, Cembalest argues, will be cutting fossil fuels out of industrial production, such as cement, steel, ammonia, and plastics. Those factories are typically powered directly by burning coal or other fossil fuels, which can generate greater heat and pressure.”
“Some on the right are accused of being ‘intellectually bankrupt’ on climate issues, and I do see evidence of that,” Cembalest writes. “But being intellectually dishonest about the viability of the Green New Deal does no one any favours. At best, it’s a slogan to galvanize support for change; at worst, it’s a sign of how little work its proponents have done.”
Bloomberg says the outlook report includes an assessment of some of the key decarbonization options, from tree planting to carbon capture and storage.
“The message to investors, Cembalest said, is not that cutting emissions is hopeless. Rather, it’s that the U.S. and other countries will need to accept much more sweeping—and likely politically unpopular—changes to reach that goal,” the news agency notes. “That could include greater use of eminent domain to seize private land for building transmission lines to move wind-generated electricity to population centres,” along with “higher taxes, including carbon taxes. And it could mean using fewer goods and services.”
But the other option, apparently unstated in Cembalest’s release, is for the financial sector to rethink the US$1.9 trillion that 33 global banks have invested in fossil fuels since the Paris agreement was signed. The annual report card released Wednesday by the Rainforest Action Network, BankTrack, Sierra Club, Oil Change International, the Indigenous Environmental Network, and Honor the Earth pointed to $196 billion in fossil investment by JPMorgan Chase and assigned it a D- grade for its climate performance.
The six organizations identified the company as a lead financier in five of the seven categories they studied: Arctic oil and gas, ultra-deepwater oil and gas, Canada’s tar sands/oil sands, fracked oil and gas, and liquefied natural gas.
“Jamie Dimon, the CEO of JPMorgan Chase, is perhaps the most hypocritical in this regard, as he has declared his support for the Paris Agreement and his opposition to [Donald Trump’s] attempt to withdraw from the accord, while at the same time presiding over a bank that is financing climate change more than any other in the world, and which has shown no indications of having any plans to change course,” the report states. The company places no restrictions on its financing for extreme oil and gas projects, and is the only bank serving as a lead financier for all four of the major companies working to drive expansion of the Canadian tar sands/oil sands.