Welcome to “Feet to the Fire: Big Oil and the Climate Crisis,” a 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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California’s Biggest Oil Well Owner Might Get a Pass on Plugging Its Wells
A new California law that requires oil companies to pay the cost to plug wells before buying them is in danger of failing its first test, reports Capital & Main’s Aaron Cantu. Gov. Gavin Newsom signed the regulation last fall, just before a merger of two of the state’s biggest oil well operators. California Resources Corporation, whose purchase of Area Energy was completed as of July 1, has not said whether it has complied or will comply with the new law. If the company fails to put up a bond to plug its roughly 37,000 wells, that burden falls to the state and could cost taxpayers billions.
Another Bank Exec Says Halting Investments in Oil and Gas Is ‘Unrealistic’
The CEO of Barclays, Europe’s biggest financier of fossil fuels, is just the latest bank executive to say that ending such investments is unrealistic. Banks “cannot go cold turkey” on financing the oil and gas sector, C.S. Venkatakrishnan told Bloomberg on June 25. In recent months, other bankers have pushed back on regulators and activist-driven pressure to stop financing Big Oil. Since 2015, Barclays has extended $232.5 billion to the fossil fuel sector, according to the Banking on Climate Chaos report. Earlier this year, the bank vowed to stop direct funding for new oil and gas projects.
Lawsuits are the Weapon of Choice for Climate Activists Hoping to Stop Fossil Fuel Financiers
The number of lawsuits filed against public and private financial institutions by activist groups intent on halting their financing of fossil fuel projects is small but growing, according to a review by the London School of Economics. In the last nine years, 33 such cases have been filed — with six in 2023 alone. “Their common goal is to amplify the importance of climate risk in financial decision-making, increasing the cost of capital for high-emitting activities to the point where such activities become economically unviable, even if they remain legally permissible,” the report states.
Recently, Australia’s export credit agency Export Finance Australia and another government agency were sued by environmental nonprofit Jubilee Australia Research Centre for helping finance new fossil fuel projects. The plaintiffs intend to pressure government agencies to disclose the climate impact of such investments.
‘Summer of Heat’ Activists Blockade Doors of Citigroup Headquarters
As part of the second week of the “Summer of Heat on Wall Street,” a direct-action campaign targeting banks and financial institutions, hundreds of activists demonstrated outside the New York headquarters of Citigroup to protest its financing of fossil fuel projects. The bank is the largest financier of oil and gas companies that expanded their productions last year, according to the Rainforest Action Network’s Banking on Climate Chaos report.
“We do not want to be here, but we feel we have to,” said New York Communities for Change campaigner Alice Hu at the rally, amidst boos and heckles from the onlooking crowd. “The fires, the floods, the famines and the mass, forced migration from the climate crisis are because of the $396 billion that Citibank has poured into fossil fuels since the Paris Agreement.”
Fossil Fuel Companies are Financing Investments Through Retained Earnings
With the rise in prices in the wake of the pandemic and Russia’s invasion of Ukraine, oil and gas companies have been able to reduce their debt levels by borrowing money from banks and other financial institutions, according to the International Energy Association. As a result, they’re been able to be more generous with shareholders, via buybacks and dividends. But their debt levels (46% of total spending) are still much larger than those of clean-energy companies at around 20%. The latter tend to secure financing through venture capital rather than debt markets.
Deal to Stop Public Financing of Global Oil and Gas Projects Squelched by U.S. Inaction
The U.S. election is still five months away, but it’s already having an impact on some of the world’s most important climate policy decisions. Last week, members of the Organisation for Economic Co-operation and Development met behind closed doors but failed to take action on a proposal to end public financing (through loans and guarantees) for international oil and gas projects. That was due to the lack of clear support from the U.S. “We haven’t yet seen the U.S. put forward an explicit proposal to limit export financing of all fossil fuels, not just coal … [but] oil and gas as well,” Jake Schmidt, senior director for international climate at the Natural Resources Defense Council, told E&E News. G20 governments and multilateral development banks provided $142 billion in public finance for fossil fuels between 2020 and 2022, according to a recent report from Oil Change International. That’s almost 50% more than they provided in financing for clean energy ($104 billion) during that period.
