Image: Rainforest Action Network
Big banks back coal, oil and gas extractions with billions of dollars in financing every year. The 2016 $horting the Climate report exposes the holdings of the world’s largest privately-operated fossil financiers by assessing investments in coal mining, coal power generation, extreme oil extraction (“arctic, tar sands and ultra deep offshore”) and Liquefied Natural Gas (LNG) Exports.
JP Morgan Chase, Citigroup and Deutsche Bank contributed most substantially to the $786.9 billion of financing for carbon intensive energy projects between 2013 and 2015. Barclays, Bank of America, HSBC and Morgan Stanley trailed closely behind.
Despite multiple negative factors, including the largest private coal company on Earth filing bankruptcy; the stock market value of coal mining corporations dropping 92 percent in the last five years; and the impossibility of stabilizing the climate to 2C if 2,440 planned coal plants are built; big banks invested $42.39 billion and $154 billion in coal mining and coal power plants respectively, during the study period. Deutsche Bank and Citigroup held the largest positions in each sector respectively.
Extreme oil expansion refers to the most expensive, hardest to reach and most environmentally harmful drilling operations. Oil prices have slumped in recent years and, due to their high price tags and large associated emissions, these projects face significant stranded asset risk. Nevertheless, international banks invested a whopping $307 billion in related projects, with JP Morgan Chase leading the pack with nearly $38 billion invested.
Liquefied Natural Gas has experienced a boom in recent years partially due to recent discoveries of untapped reserves and technological innovations. Some people argue that natural gas is a transition fuel and has a smaller environmental footprint than other fossil fuels. However, the report points out that in terms of emissions, LNG exports (which are derived from shale gas, liquefied and shipped around the world) “barely break even with coal power generation over a 20 year time frame.” The industry is also contaminating water bodies and destroying natural ecosystems. The financial sector poured $283 billion into LNG during the analysis period; JP Morgan Chase again took the prize for most invested.
For banks to reap the full financial benefits of fossil fuel investments the projects must run successfully for decades. If the proposed dirty energy projects are built, we will fail at meeting climate targets set out in COP21. Each dollar spent on these extractive industries is a bet against global climate action, because if global climate agreements are enforced, coal, oil and gas operators will be forced to shut down. Investing in these industries is not only financially short-sighted, it is a bet against the future sustainability of humankind.