Global banks keep up pace with $742bn in fossil fuel finance despite climate pledges

Global banks supplied $742bn in financing to coal, oil and fuel corporations final 12 months, regardless of the fanfare of local weather pledges by lenders that signed as much as former Bank of England governor Mark Carney’s business alliance, based on the most recent complete evaluation by an activist group.

Fossil gasoline financing remained dominated by the identical 4 US banks, led by JPMorgan Chase, and adopted by Wells Fargo, Citi and Bank of America, based on the annual report produced by a coalition of marketing campaign teams organised by the Rainforest Action Network.

All 4 banks are members of the so-called Net-Zero Banking Alliance that’s a part of Carney’s Glasgow Financial Alliance for Net Zero umbrella group. The group made the declare on the UN local weather summit in Glasgow in November that $130tn of personal sector property was dedicated to attaining internet zero greenhouse fuel emissions.

Overall, the world’s 60 largest lenders supplied solely barely much less financing for fossil fuels in 2021 than the $750bn recorded in 2020, the RAN report discovered. The banks have supplied a complete of $4.6tn because the Paris Agreement was signed in 2016, peaking in 2019 at $830bn, it stated.

The power disaster that has been exacerbated by Russia’s invasion of Ukraine has pushed expectations that the demand for gasoline will help coal, oil and fuel manufacturing within the brief time period.

Although the whole quantity supplied by the banks in 2021 for fossil gasoline enlargement fell to $185.5bn from $319.7bn in 2020, that decline “may be cancelled out in the year ahead by pressures in energy markets”, stated James Vaccaro, govt director of the Climate Safe Lending Network, a bunch of banks, NGOs and traders.

“There is very little to feel positive about,” he stated. The findings had been in “stark contrast” with banks’ local weather pledges, and confirmed that “there are still considerable flows of finance to fossil fuel companies at similar rates to that in previous years”.

JPMorgan was the most important western financier of the Russian state power firm Gazprom over the previous six years, based on the RAN evaluation.

In whole, JPMorgan funding of fossil fuels corporations in 2021 stood at $61.7bn, up about $10bn after falling by an identical quantity the earlier 12 months. The financial institution stated it was “taking pragmatic steps” to meets its emission discount targets “while helping the world meet its energy needs securely and affordably”.

Wells Fargo equally recorded a bounce again by about $20bn to $46.2bn in 2021, after the most important backer of US fracking put the autumn the earlier 12 months all the way down to the hunch in oil costs.

Citi moved behind Wells Fargo in 2021, offering $41bn of financing, down from $49bn the 12 months earlier than. The financial institution stated its technique was based mostly on “responsibly driving the transition to a net zero economy and . . . focused on working with our fossil fuel clients to help them decarbonise their businesses”.

Similarly, the Bank of America lowered its fossil gasoline financing actions to about $32bn in 2021, from $42bn the 12 months earlier than. The French banks additionally pared again their actions in 2021, after a surge the earlier 12 months.

Although many banks had local weather insurance policies in place, they had been typically worded in such a means as to be ineffective, the RAN report stated. For instance, exclusions associated to project-specific finance, or solely restricted lending and never underwriting.

Of the 44 banks lined by the report that had dedicated to internet zero emissions targets by 2050, it discovered 27 didn’t have a “meaningful no-expansion policy for any part of the fossil fuel industry”.

That enabled fossil gasoline financing to proceed with out breaching insurance policies, the report stated. Soon after the launch of the Net-Zero Banking Alliance, founding signatories together with Citi, BNP Paribas and Barclays took half in multibillion-dollar financing offers with corporations together with Saudi Aramco and the Abu Dhabi National Oil Company, the state-owned oil corporations, and the US oil main ExxonMobil, the report famous.

Banks’ financing exclusion insurance policies typically concentrate on coal, essentially the most polluting fossil gasoline that has grow to be a focus for policymakers.

Yet solely about 4 per cent of the $4.6tn in fossil gasoline lending and underwriting recorded since 2016 went in the direction of coal mining corporations, and the majority of coal financing got here from Chinese state-backed banks, the report stated. Roughly 1 / 4 of the whole financing went to utilities, together with coal energy turbines, and about two-thirds went to grease and fuel.

The evaluation additionally famous the “alarming” improve within the financing of tar sands oil initiatives, which jumped 50 per cent between 2020 and 2021 to $23.3bn.

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