‘Greenwashing’ banks raised 1 trillion dollars for fossil fuel giants
Original article by Josephine Moulds republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
NatWest among several banks in ‘net zero’ alliance continuing to support the fossil fuel industry
At a glance
- Banks with net zero pledges helped raise $1 trillion for companies expanding fossil fuels
- Among them is NatWest, which may have broken climate pledge by funding BP
- BP is developing a ‘carbon bomb’ in Azerbaijan, host of COP climate talks
Less than a hundred miles from where world leaders are discussing how to meet their climate pledges, BP is drilling for gas.
The Shafag-Asiman project, a sprawling gas field off the Azerbaijani coast, could inject more than 1 billion tonnes of carbon into the atmosphere. That is more than the UK would emit over three years, striking a major blow to efforts to slow down global warming.
BP has said it intends to invest heavily in new oil and gas fields in the coming years. But it would be unable to pursue these dirty projects without billions in support from big banks. NatWest, for one, helped BP raise almost $500m last year in an apparent breach of its climate commitments.
Banks will be in focus at Cop29, currently underway in Baku, Azerbaijan, as world leaders discuss how to raise trillions of dollars for countries suffering the effects of climate change.
Although talks are unlikely to address their continued support for dirty energy, more than 140 banks worldwide have pledged to cut emissions associated with their lending and investments to almost zero by 2050.
In May 2021, the IEA, the global body coordinating countries’ energy policies, sounded the alarm. Any new oil and gas developments would make it inevitable that temperatures would rise by more than 1.5 degrees. In other words, they would devastate the planet.
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Meanwhile, at BP’s Shafag-Asiman field, engineers were celebrating after finding fossil gas several thousand metres under the seabed – a new discovery that could significantly increase its output from the region. And the bankers were preparing to raise billions more for BP.
That’s not all. Since May 2021, global banks that have committed to net zero have poured almost $1 trillion into companies pursuing expansion of oil and gas projects that would push the world beyond its survivable limits. Taken together these projects would produce almost seven times the annual emissions of the US.
“It’s indefensible,” said John Lang, founder of the Net Zero Tracker, which evaluates big companies’ green plans. “There’s no way we can meet the temperature goals of the Paris Agreement if we continue financing the exploration of oil and gas.”
He said banks with net zero commitments covering direct and indirect emissions could not fund oil and gas expansion. “It’s greenwashing, plain and simple.”
NatWest said it could not comment on specific customers. It said it had conducted a review into its relationships with a number of oil and gas companies “to ensure they had a credible transition plan aligned with the 2015 Paris Agreement”. It refuted the suggestion it had not met its public commitments.
BP said it is aiming to be a net zero company by 2050 or sooner and believes its strategy is consistent with the goals of the Paris Agreement.
‘Net zero’
It was at Cop26 three years ago that a number of major banks first pledged that by 2050 they would cut almost all the emissions from their lending and investments to zero and invest in financial products to offset the remaining emissions – which has come to be known as “net zero”. NatWest, for instance, promised to stop funding companies that do not have a credible plan to shift their business away from fossil fuels. Its support for BP suggests it may have broken that promise.
BP reported record profits in February last year and promptly announced it would scale back its climate commitments and increase investments in oil and gas. It then enlisted the help of NatWest and a host of other ‘net zero’ banks to raise a total of $5.3bn in 2023 – and went on to invest $4.8bn in its oil and gas operations in the first half of this year.
In April, BP announced the first oil to be extracted from a new platform off the coast of Azerbaijan, which is expected to be operating until at least 2049, just a year before the world is supposed to have cut its dependence on fossil fuels.
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The world-leading Grantham Research Institute assessed how credible the largest oil and gas companies’ transition plans were. It said BP’s fell short by a significant margin.
Many of the world’s biggest banks trumpet their net zero pledges to bolster their green credentials. But Nigel Topping, a member of the UK’s Climate Change Committee, explains that even when banks commit to cutting emissions associated with their financing in line with net zero, “it doesn’t stop them from financing companies who are continuing to expand [oil and gas production]”.
More than 180 companies expanding fossil fuel production have raised money from ‘net zero’ banks since May 2021, according to an analysis of data from the environmental campaign group, Rainforest Action Network. Their expansion projects are spread across the globe, from ConocoPhillips in the Arctic circle to Petrobras near the mouth of the Amazon river, and Shell in the UK’s North Sea.
A TBIJ analysis of the Global Oil and Gas Exit list, compiled by environmental campaign group Urgewald, shows these expansionary projects could produce almost 90 billion barrels of oil equivalent, which scientists say should stay in the ground. Around half of that is oil and half is gas, according to Urgewald, and calculations suggest it could generate more than 34 billion tonnes of CO2 emissions when burned.
Topping said: “The fundamental problem is that the transition is not driven by regulation … The only people who can make companies change are regulators, and the regulators are letting us down.”
Lead image: Offshore oil rigs at Baku Bay, near Baku, Azerbaijan. Anatoliy Zhdanov / Sipa US / Alamy Stock Photo
Reporter: Josephine Moulds
Environment editor: Rob Soutar
Deputy editors: Katie Mark & Chrissie Giles
Editor: Franz Wild
Production editor: Alex Hess
Fact checker: Somesh Jha
TBIJ has a number of funders, a full list of which can be found here. None of our funders have any influence over editorial decisions or output.
Original article by Josephine Moulds republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
Fossil fuel supply: the elephant in the room at climate change conferences
Jordi Roca Jusmet, Universitat de Barcelona
“Natural resources … are a gift from God. Every natural resource, whether it’s oil, gas, wind, sun, gold, silver, copper, they are all natural resources. Countries should not be blamed for having them, and should not be blamed for bringing these resources to the market because the market needs them. The people need them.”
These were the words of Ilham Aliyev, president of Azerbaijan, at the opening of the recent United Nations COP29 convention on climate change in Baku. https://www.youtube.com/embed/4pqVwrMAGSc?wmode=transparent&start=0 Ilham Aliyev’s speech at COP29.
It seems completely inappropriate to sing the praises of fossil fuels at an international gathering that aims to radically reducing greenhouse gas emissions. Indeed, this goal is absolutely unachievable without drastic cuts to fossil fuel use, but Aliyev’s speech does have a positive, if indirect, impact – it points a spotlight at the elephant in the room, one that has remained virtually invisible throughout the United Nations Framework Convention on Climate Change’s (UNFCCC) long history.
COP agreements have never made commitments to limit fossil fuel extraction, even though this would be the most direct – and the only certain – way to rein in the leading cause of climate change.
Reducing demand but not supply: a pointless endeavour
Fossil fuels are key to climate change, but they are largely absent from COP agreements. The biggest achievement came in 2023, at COP28 in Dubai (United Arab Emirates), when an unspecified proposal was made to “transition away from fossil fuels”. This was not ratified at COP29, mainly due to pressure from Saudi Arabia.
In economic terms, the focus of climate agreements has always been on demand. It is expected that national measures, such as promoting renewable energy and public transport, or penalising the use of fossil fuels by putting a price on carbon emissions will indirectly lead to less fossil fuels being put on the market.
While these measures can be effective, they often end up lacking, or even non-existent, because they depend completely on the policies and reactions of the nations and companies who own, supply, and profit from these resources.
Commitments to supply-side agreements are not on the COP agenda, even though most of the fossil fuel reserves that are considered exploitable – and therefore economically valuable – cannot be burned if we are to even come close to the UNFCCC climate goals. They must be left in the ground.
However, global CO₂ emissions are not falling. On the contrary, the use of coal, petroleum and natural gas have hit record highs in 2024.
How can we restrict fossil fuel extraction?
Limits have been put forward in the past. In 2014, for instance, economists Paul Collier and Anthony J. Venables proposed a sequenced plan for phasing out coal, which would involve progressive measures not to start new operations and to close mines, with countries staggered in a fair order. “Fairness” would be determined by ability to pay, per capita emissions and historical responsibility.
We can also take inspiration from nuclear weapons treaties, as Professor of International Relations Peter Newell and political economist Andrew Simms have done. They advocate for a fossil fuel non-proliferation treaty along the lines of the nuclear non-proliferation treaty. Many states and cities around the world have already signed up to the initiative.
There have also been local initiatives, such as the commitment to stop extracting oil in an area of the Yasuní National Park in Ecuador due to its exceptional biodiversity and the existence of populations in voluntary isolation. This will also benefit the global climate by reducing emissions.
The proposal was initially taken up in 2007 by the then president Rafael Correa on the condition that the international community would financially compensate part of the sacrificed monetary income. However, scarce contributions to the compensation fund led Correa to renounce the initiative and allow oil exploitation.
Environmentalists, affected communities and academics demanded a referendum and, after years of litigation, the right to consultation was recognised by the courts. In August 2023, a large majority (almost 60 %) voted in favour of keeping the oil reserves “in the ground indefinitely”. Money does not always prevail, even in poor countries, though the Ecuadorian government has postponed its mandate to dismantle drilling sites, meaning many are still operational today.
A blessing for some, a curse for others
The above case and many others – such as the Niger Delta (Nigeria), where Shell has been extracting oil since 1958 – remind us that “God’s gift” of natural resources can also be a curse.
A gift for some – usually multinational companies or small numbers of wealthy people – can be a curse not only for the planet, but also for the local population who suffer the devastating environmental and social consequences of extracting these resources, and who face violent repression when they protest.
It was in places like Nigeria and Ecuador that the activist slogan “leave fossil fuels in the ground” was coined. Even if their motivation is primarily or solely to protect their territory, social movements opposing coal mining or hydrocarbon extraction undeniably contribute – from the supply side – to curbing climate change.
Together with social movements, academic and political work is key to defining the areas where preventing the exploitation of fossil fuels is a priority, and to establishing economic compensation. Martí Orta-Martínez, from the University of Barcelona, is doing just this. He is leading a project to geographically define the fossil fuel deposits that should not be burned, which was presented at a seminar in the framework of COP29.
It may sound utopian to seek supply-side international agreements, but the truth is that it is impossible to reduce global emissions and move towards decarbonisation without a rapid decrease in the extraction of fossil fuels. COPs should heed this evidence.
Given the magnitude of the climate challenge, it is not a question of deciding between demand or supply-side policies, but of using both, promoting them in each country, and reaching robust agreements at an international level.
Jordi Roca Jusmet, Catedrático de Economía, Universitat de Barcelona
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Green Party responds to conclusion of COP29
Reacting to the conclusion of COP29, Green Party co-leader Adrian Ramsay MP said:
“This COP has tested the patience of everyone who wants to see the devastating climate crisis tackled.
“The final agreement is simply not good enough for the world’s poorest nations with too little money to deal with devastating impact of climate change, and the oil and gas lobby has succeeded in weakening the commitment made at the last COP to ‘transition away’ from fossil fuels.
“We are half-way through a critical decade for action, and the devastation wrought through more floods, drought and wildfires is now obvious.
“The moral and scientific case for doing everything possible to meet the demands of the Paris climate agreement becomes stronger as the damage caused by every 0.1 degree rise becomes ever clearer.
“Now is the time for action. That means turning the limited financial pledges agreed at COP, which already fall far below the demands of the global South, into hard cash.
“That money – in the form of grants, not loans – needs to be available right now for adaptation and mitigation, alongside funding to cover the loss and damage already experienced by the poorest countries.
“The climate finance to fund the transition to a global green economy only makes sense if we move away from fossil fuels. Here, that means the Labour government ruling out the Rosebank development in the North Sea.
“Prime Minister Keir Starmer has shown commitment to the COP process by being one of the few leaders of richer countries to attend.
“Now, he needs to build on that foundation and take an international lead in defending the gains made through previous COPs in the face of what will be a relentless attack by fossil fuel companies backed by a climate denier in the White House from January next year.
“He must also take seriously the need to make the UK more resilient to changes in the climate that are already affecting us here.
“Climate action today is about creating a world tomorrow in which can meet people’s basic needs and enable people and nature to thrive.
“The UK government should back the call from international leaders for a reformed COP process in which the powerful fossil fuel lobby is excluded.
“The fossil fuel lobby has the self-interest to block the immediate action the people and planet need. They cannot be allowed to succeed.
“COP must become the forum that holds governments to account and pushes forward change, including supporting countries to adapt to the impacts of the crisis already being felt.
“A COP that excludes the fossil fuel companies and their lobbying arms while supporting representatives of countries and indigenous peoples most impacted by climate change can transform all our futures.”