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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Regional U.S. Banks Dramatically Increase Lending to Oil and Gas Projects
While major European banks say that they intend to pull back from the financing of fossil fuel production, regional banks in the U.S. are filling the gap. Citizens Financial Group, Truist Securities, Fifth Third Securities, US Bancorp, and BOK Financial Corporation — the latter of which has said that it sees many “more opportunities” in the oil and gas sector — have sharply ramped up their lending to the fossil fuel industry in recent months. Combined, their lending jumped by more than 70% on an average annualized basis since the beginning of 2022, compared to the previous six years, according to data compiled by Bloomberg. The five banks are now among the world’s top 35 banks when it comes to deals signed with the oil and gas industry, per Bloomberg data. The trend comes amid a movement by major oil-producing states, such as Texas, Louisiana and Oklahoma, to avoid funds managed by financial institutions that they claim are shunning the oil and gas industry due to the banks’ ESG (environmental, social and governance) policies.
Despite Net-Zero Commitments, Wealthy Countries Keep Financing Fossil Fuel Projects in Poor Countries
The wealthiest countries in the world have made strong commitments to halt funding of overseas fossil fuel development, but they haven’t stopped financing oil, gas and coal projects in poor countries, according to climate groups Oil Change International and Friends of the Earth U.S. The G20 group of countries and multilateral development banks have plowed $142 billion into fossil fuel projects overseas from 2020 to 2022, they estimate. The major funders were Canada, South Korea and Japan — as an example, Japan Bank for International Cooperation has supported new fossil fuel projects such as the Scarborough gas field off the coast of Western Australia and gas power plants in Mexico. “We must continue to hold wealthy countries accountable for their role in funding the climate crisis, and demand they move first and fastest on a fossil fuel phase-out, to stop funding fossil fuels, and that they pay their fair share of a globally just transition, loss and damage and adaptation finance,” OCI public finance analyst Claire O’Manique told The Guardian.
Cancel Debts Tied to Fossil Fuel Projects in Developing Countries, Activists Demand
Amid widespread concerns that developing countries will go further into debt to meet climate goals outlined in the 2030 Agenda for Sustainable Development and Paris Agreement, activists are pushing development banks such as the World Bank to cancel debts tied to fossil fuel projects in their countries. Countries such as Angola and Oman will pay a record $400 billion to service external debt this year, per a new report by the advocacy group Debt Relief for Green and Inclusive Recovery Project. The group claims that developing countries spend more on interest payments on these debts than on education or health. “These outstanding debts may be transformed into grants for renewable energy systems,” writes Filipino human rights activist Lidy Nacpil.
TD Bank Shareholders’ Support for Net-Zero Policy Details Grows
TD Bank shareholders presented a proposal at the bank’s annual meeting on April 18 calling for more clarity on how it plans to meet its 2030 emissions-reduction targets — laying out specific policies, timelines and emissions reductions. The group included Investors for Paris Compliance, Nomura Asset Management U.K., AP Pension, Vancity Asset Management and Green Century Capital. The proposal was defeated but received 28.6% of the votes, surpassing the 23.5% in support for a similar proposal last year. TD claims that its climate plan meets disclosure recommendations laid out by the Glasgow Financial Alliance on Net Zero. But Investors for Paris Compliance director of research and policy Kyra Bell-Pasht told Yahoo Finance Canada that “Canada’s banks, including TD, are misaligned with net zero and are not giving investors or the public credible plans to change this.”
Semantic Twist Gave Barclays a “Loophole” to Keep Financing Fracking, Nonprofit Claims
Words matter. A small tweak by the influential International Energy Agency (IEA) in its report last year on fossil fuel financing offered a loophole that was soon exploited by one of the world’s largest banks to keep financing fracking, according to the nonprofit ShareAction. The IEA’s original 2021 report bluntly asserted that “there is no need for investment in new fossil fuel supply in our net zero pathway,” but its updated edition last year softened that language to state that “no new conventional long-lead-time oil and gas projects are approved for development after 2023” under the IEA’s net zero scenario, reports the Financial Times. When Barclays, a major lender to the oil and gas sector, announced its new climate policy in February, it cited the IEA report in stating that it would no longer finance companies that invest heavily in “long-lead expansion.” That allowed the bank to give itself what ShareAction refers to as a “loophole” to finance different types of oil and gas expansion. (The bank did not return calls for clarification from a FT columnist.)
