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Global banks inject $7 trillion into fossil fuels since Paris Agreement

A new report finds that global financial institutions have continued to invest in oil, gas, and coal at elevated levels since the Paris Agreement, despite calls to accelerate the energy transition.

JPMorgan Chase & Co.’s sign at its office building in Houston, Texas (Photo: Adobe Stock/JHVEPhoto)

The world’s 60 largest banks have funnelled nearly $7 trillion in financing to oil, gas, and coal projects since the Paris Climate agreement was signed in 2015, according to a new report. Half of that total went into new or expanding fossil fuel infrastructure.

JPMorgan Chase continues to be the top financier of the fossil fuel industry, pumping $430 billion into projects over the last eight years, according to the report, published by a coalition of climate groups, led by Rainforest Action Network. Two other American banks were not far behind on the list, including Citigroup ($396 billion) and Bank of America ($333 billion).

Japan’s MUFG ($307 billion) and Mizuho ($272 billion) came in fourth and sixth place, respectively.

The companies that are expanding fossil fuels the most are aided by a relatively small number of financial institutions. Just 20 upstream oil and gas companies account for more than half of the resources expanded or under development since the Paris Agreement. That global expansion was underwritten by 10 banks, who accounted for 58 percent of the financing for those upstream oil and gas companies.

At the same time, the sector of investment favoured by banks is changing. While levels of investment in coal and Arctic oil drilling have declined, for example, projects specialising in gas production and LNG exports have become much more prominent.

For instance, 20 different banks are helping to finance the Plaquemines LNG project under construction in southeastern Louisiana by Venture Global. That project will export gas in the form of LNG from the U.S. Gulf Coast. Banks backing that project include Bank of China, ING, Mizuho, MUFG and Scotia Bank.

Another example is the Rio Grande LNG project on the southern coast of Texas. The $15 billion LNG project is backed by MUFG, Mizuho, Intesa Sanpaolo, Banco Santander and RBC.

Climate scientists have warned that fossil fuels need to be phased down rapidly, and at COP28 last year, governments committed to that goal. But the enormous volume of finance coming from the world’s largest banks will complicate the transition by locking in dirty forms of energy.

“Banks that profit from climate chaos invent new greenwash every year, but we have the receipts that show how much money they put into fossil fuels,” April Merleaux, a researcher at Rainforest Action Network and a coauthor of the report, said in a statement.

Although the levels of financing for oil, gas, and coal projects remains excessive, given the need to slash greenhouse gas emissions, the volume of lending and underwriting declined in the last two years, falling from $916 billion in 2021 to $778 billion in 2022. Last year, financing for fossil fuels fell again, dipping to $705 billion.

Some financial institutions criticised the methodology of the report. Barclays noted that the report included figures that encompassed all general corporate financing provided to a company and attributed it based on their revenue streams, and not on the use of the proceeds or on the actual investment activity. Barclays went on to say that its financed emissions have declined by 44 percent in the energy sector and by 26 percent in the power sector. The bank also said that it no longer provides project finance or direct finance to new oil and gas fields.

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