Welcome to “Feet to the Fire: Big Oil and the Climate Crisis,” a biweekly newsletter in which we’ll share our latest reporting on how the fossil fuel industry is driving climate change and influencing climate policy in five of the nation’s most important oil-and-gas-producing states. In addition, we’ll 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. We will also bring you the latest from our climate and media columnist, acclaimed environmental writer Mark Schapiro.
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The debate over the transition to clean energy threatens to become even more heated than the ongoing battle over the continued use of fossil fuels, even as the effects of the climate crisis intensify in ways that were unimaginable to most people just a few years ago.
Cities, universities and pension funds around the country have cut their investments in fossil fuels, but the divestment movement has recently hit some hurdles. For the second year in a row, the California Legislature killed a bill that would have required the state’s massive public pension funds, California Public Employees’ Retirement System (CalPERS) and the State Teachers’ Retirement System (CalSTRS), to stop investing in the 200 largest oil, gas and coal companies. Together, they have invested an estimated $14.8 billion in fossil fuel companies. In this case, a single legislator, Assemblymember Tina McKinnor, refused to take up the bill in committee, expressing concerns over how the move would affect workers’ retirement funds, The Slick’s Aaron Cantú reports.
Banks are also major players in the climate crisis, helping governments raise money to deal with its devastating effects while also lending money to fossil fuel companies. This is most apparent in California, which uses major banks such as JPMorgan Chase & Co. and Wells Fargo & Co. to sell bonds that finance various billion-dollar initiatives to shore up its defenses against heat, flash floods, rising seas and other effects of climate change. Those banks are among the biggest global financiers of the petrochemical activity causing the crisis, Cantú reports. “California’s investments in climate resilience should not contribute to the profits of banks that are financing the expansion of fossil fuels and undermining California’s efforts to reduce emissions,” said Deborah Moore of the activist group Third Act.
In New Mexico, a major pipeline operator that hopes to profit off the hype surrounding hydrogen as a potential clean energy source is stirring up outrage. Tallgrass Energy recently outlined plans for what could end up being the country’s longest hydrogen pipeline, which would cross Navajo land that has been scarred by decades of fossil fuel extraction. The developers tout the benefits of clean hydrogen and the jobs that it would bring to the reservation, while Navajo opponents say it is another way for outsiders to make money by harming their environment and health, The Slick’s Jerry Redfern reports.
The shocking volume and pace of climate-induced emergencies are leaving both scientists and journalists scrambling to keep up, Schapiro says. “The cascade of climate extremes thus far this summer calls out for a new type of disaster reporting,” one that makes climate change the throughline connecting disasters rather than treats each one as unrelated to the others, Schapiro argues.
Christian Nonprofit Dumps Barclays Over Fossil Fuel Financing
Christian Aid, one of the largest charities in the U.K., says it will no longer bank with Barclays because of the global bank’s financing of fossil fuels. The 78-year-old organization had 16.5 million pounds ($21.16 million) in a Barclays account. In a statement, Christian Aid’s COO, Martin Birch, said that the bank’s “record on fossil fuel finance, and their weak commitment to future improvements in this area meant that we had to seek a more suitable provider.” Between 2016 and 2022, Barclays financed $190 billion in fossil fuel projects around the world, including Arctic drilling and fracking, according to an analysis by Rainforest Action Network.
Banks Targeted for Financing Oil and Gas Projects in the Amazon
Eight multinational banks — including JPMorgan Chase, Citibank, Banco Itaú Unibanco S.A., HSBC Bank, Santander Bank, Bank of America, Banco Bradesco S.A. and Goldman Sachs — are under pressure to stop financing oil and gas projects in the Amazon region ahead of a summit meeting on the deforestation of the fragile landscape. More than $20 billion has financed the extraction of fossil fuels from the Amazon in the last 15 years, with more than half of that coming from the eight banks, according to a report published by the NGO Stand.earth and the Coordinator of Indigenous Organizations of the Amazon Basin, or COICA. The report includes a database of all the banks involved in financing such activity in the region, either directly or indirectly through underwriting bond deals for upstream and midstream development and the shipment of oil and gas in the region.
Exposing the “Hidden Pipeline” of Financing: $266 Billion in Underwriting Bonds and Equities
A “hidden pipeline” of financing for fossil fuel activities is underwriting bonds and equities for oil and gas companies, according to a new report by the Sierra Club’s Fossil-Free Finance campaign. Overall, since 2016, six of the largest U.S. banks — JPMorgan Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley and Goldman Sachs — provided more than $433 billion in lending and underwriting to the 30 most active companies involved in fossil fuel extraction and combustion around the world.
“Banks play a vital role in capital markets,” the report says. “Acting as underwriters, they are the gatekeepers of fossil fuel companies: they advise companies issuing bonds and equities, hold the vital information on the issuer, and help market the instruments to investors disclosing only the necessary risk.”
Germany Appears to Break Its Pledge to End International Fossil Fuel Financing
Despite its pledge at COP26 in Glasgow to end funding for coal, oil and gas projects overseas by the end of last year, Germany’s export credit agency recently released a draft policy for the provision of guarantees in the energy sector that climate activists are calling a breach of its commitment. As part of the proposal, the government says it will no longer support coal and oil operations but makes an exception for the development of new gas fields and related transport facilities until 2025 when necessary for national security. “This policy is anti-science,” fumed Adam McGibbon from the nonprofit Oil Change International. “It runs against everything that the world’s scientists are telling us. No new fossil fuel infrastructure can be built if the world is to meet climate targets.”
Banks Seek to Change Rules on Their Net-Zero Goals, Pitting Them Against Environmental Advocates
Almost half of the financing provided by six of the biggest U.S. banks (JPMorgan Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs) for top fossil fuel companies comes from indirect activities such as underwriting bond and stock sales rather than direct lending, according to the Sierra Club. Yet earlier this month, most of the banks in an industry working group that is developing standards on how to account for carbon emissions resulting from such underwriting activity voted to exclude two-thirds of those emissions, Reuters reports. Changing the rules will affect the banks’ targets for becoming carbon neutral by 2050. Banks argue that they should assume responsibility for only one-third of such emissions because they don’t have as much control over the borrowers as they do loans.
Insurers Are “Uniquely Exposed” to Climate Crisis Because of Billions Invested in Fossil Fuel Assets
By investing hundreds of billions in fossil-fuel-related assets, U.S.-based insurers are at risk of climate-related damage to their underwriting business, according to a new report by sustainability consultancy ERM, investor advocacy group Ceres and carbon accounting firm Persefoni. Some insurers have already taken steps to limit their exposure: Several companies recently decided to stop insuring homes in high-risk areas such as California. Since insurers invest for the long term, assets such as bonds can sit on their books for years after a major shift in energy regulations and practices. “We started excluding coal in 2015, but some of our coal bonds run for 20 years,” said one executive at a European-headquartered insurance group quoted in the report.
“Greenwashing” by Banks and the Misuse of “Sustainable Finance” Credit
More banks are being accused of “greenwashing” — a term typically applied to companies that make unsubstantiated claims about their products being environmentally friendly — by continuing to finance fossil fuel companies via credit facilities intended for environmental financing. Barclays is under fire in the U.K. for making a $10 billion revolving credit facility intended for “sustainable finance” available to oil giant Shell because it aimed to reduce the carbon intensity of its oil and gas projects by 2025. Such sustainability-linked loan facilities, or SLLs, are the focus of the U.K.’s Financial Conduct Authority, which sent a letter to banks earlier this year warning of “the possibility of potential risks to market integrity and suspicion of greenwashing in the context of SLLs.”
