Welcome to “Feet to the Fire: Big Oil and the Climate Crisis,” a biweekly newsletter in which we share our latest reporting on how the fossil fuel industry drives climate change and influences climate policy in five of the nation’s most important oil and gas-producing states. In addition, we shine a spotlight on the financing of the fossil fuel industry, holding banks and other financial institutions accountable for their role and providing you with updates on their activities.
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Thousands of Abandoned Oil and Gas Wells in Texas Are Polluting the Environment
There are more than 8,400 orphan oil and gas wells in Texas — but that barely scratches the surface since that count doesn’t include an unknown number of abandoned wells that are more than a century old and cannot be found in state records. Many of them are leaking produced water, hydrocarbons and gas to the surface and threatening groundwater, and that represents an existential threat to Schuyler Wight, a West Texas rancher who told Capital & Main’s Elliott Woods that he has about 250 aging and derelict wells on his land, and he’s frustrated by the state’s lack of attention to the problem.
“How Do You Approve an Underground Toxic Waste Dump Without Telling Nobody?”
It was a shock to Mario Atencio when he discovered that an oil and gas company was planning to convert a water well into a disposal site for toxic wastewater less than a mile from his family home in New Mexico. He asks, “How do you approve an underground toxic waste dump without telling nobody?” Atencio, who has long been fighting oil and gas development on ancestral Native lands, told Capital & Main’s Jerry Redfern that he “kind of freaked out” when he learned of the planned conversion, which will likely get nixed in a pending decision by the New Mexico State Land Commissioner.
California’s Plan for a Green Hydrogen Future Carries Risks, Say Critics
California Gov. Gavin Newsom’s plan to ramp up the use of renewable hydrogen is raising concerns among environmentalists, who cite the risk of increased emissions and pollution. The state was approved by the U.S. Department of Energy for a $1.2 billion hydrogen hub investment, and critics worry that hydrogen supporters are “pushing California into a risky regulatory framework, motivated by financial incentives” in President Biden’s Infrastructure Investment and Jobs Act and the Inflation Reduction Act, reports Capital & Main’s Aaron Cantú.
Loophole in New Mexico Law May Allow Methane Releases
Despite the passage of a 2021 law that bans routine venting and flaring of natural gas, exceptions for pipeline operators paved the way for the release of millions of cubic feet of the potent greenhouse gas in January and February — their highest levels since the so-called Methane Rule was approved. The amount vented by pipeline company Targa Northern Delaware was equivalent to the carbon footprint of nearly 26,000 gasoline-powered cars driven for an entire year, reports Jerry Redfern.
New Report Names the World’s Top Banks Financing Fossil Fuels
JPMorgan is the globe’s top fossil fuel financier, committing $40.8 billion to fossil fuel companies in 2023, per the 15th annual Banking on Climate Chaos report, which provides a window into lending and underwriting to more than 4,200 oil and gas and coal companies. Altogether, the world’s 60 largest private banks have provided nearly $7 trillion in financing to fossil fuel companies since the Paris Agreement was adopted in 2015. Almost half of that amount — $3.3 trillion — went into expanding fossil fuel production. The top bank funding such expansion activities is Citigroup, which has provided $204 billion since 2016. The annual report is released by seven climate groups, including Oil Change International, Rainforest Action Network, BankTrack, Indigenous Environmental Network, Reclaim Finance, Sierra Club and Urgewald. Among other highlights of the report:
- Some banks have rolled back policies that were intended to reduce their financing of fossil fuel production. For example, Bank of America, ranked third on the 2023 list of “worst fossil fuel funders,” has dropped its exclusions on Arctic drilling, thermal coal and coal-fired power plants, per the report.
- Financing for coal mining in 2023 increased slightly over 2022, with most of the financing provided by banks located in China.
- Bank of America was one of several banks that made commitments of $2.54 billion in total to 48 companies around the world that are active in metallurgical coal mining.
- Financing for liquefied natural gas increased to $120.9 billion in 2023, led by banks such as RBC, JPMorgan Chase and Mizuho Financial.
Report: Barclays Is Greenwashing Billions of Dollars in “Sustainable Finance”
Amid increased scrutiny of sustainable and transition finance, with concerns that funds intended for companies that agree to meet climate-related targets are actually being used to finance polluting activities, a new investigative exposé by the Bureau of Investigative Journalism reports that Barclays helped raise $41 billion in sustainability-linked finance for fossil fuel companies last year. The revelation prompted one of the bank’s investors, Andrew Harper of investment manager Epworth, to call the bank “totally dishonest,” adding: “We’re concerned because the bank is making such a substantial claim and the public thinks the climate emergency is being worked towards being solved. Meanwhile, the problem is getting worse and worse.” Barclays told the BIJ that “Sustainability linked loans and bonds are an important sustainable finance tool, incentivizing borrowers, particularly in hard to abate sectors, to achieve sustainability objectives over time.”
EU’s Largest Bank Stops Underwriting Bonds for Oil and Gas Producers
BNP Paribas SA, the biggest bank in the European Union, said that it has stopped underwriting bonds for oil and gas producers, one of the biggest steps taken to reduce fossil fuel financing by financial institutions. The change comes amid stricter ESG regulations in Europe and a lawsuit against the bank’s financing activities that was brought by climate activists last year. BNP has increased its use of sustainable finance and is currently the biggest underwriter of green bonds in the world, according to data compiled by Bloomberg. BNP’s decision “sets them apart from other international banks,” Lucie Pinson, director of Reclaim Finance, a Paris-based climate nonprofit, told Bloomberg.
Australia’s Top Banks Now All Rule Out Project Financing for New Oil and Gas Fields
One of Australia’s biggest lenders, ANZ, announced it would no longer provide direct financing to new or expanded oil and gas fields as well as new LNG export plants. With the announcement, the continent’s four biggest banks — ANZ, Commonwealth Bank, NAB, and Westpac — have closed the door on project financing for new oil and gas fields. Amid pressure from shareholders and climate activists, ANZ won’t be financing a controversial LNG project in Papua New Guinea that is being developed by TotalEnergies, Santos and ExxonMobil. As part of its broader climate strategy, ANZ is requiring its 100 biggest customers to make progress on their transition plans.
U.S. Oil and Gas Producers Seeing “a Lot More Interest From the Bank Community”
Though foreign banks have pulled back from the oil and gas industry in the face of sustainability concerns, other lenders are jumping back in, Michael Bodino, managing director of investment banking at Texas Capital Bank, told Hart Energy: “We’re seeing a lot more interest from the bank community broadly to get new credits in their portfolios.” In addition, pension and insurance companies in pursuit of a return on their investment are looking to the upstream sector (referring to the exploration and extraction segment of the industry). In addition, the leveraged loan market, which goes principally to borrowers with high levels of debt, has been active in the industry, said Bodino.
