‘Net-zero’ banks have raised $1 trillion for fossil fuel giants

Less than a hundred kilometers from where world leaders are discussing how to fulfill their climate promises, BP is drilling for gas.

The Shafag-Asiman project, a vast gas field off the coast of Azerbaijan, could inject more than 1 billion tons of carbon into the atmosphere, dealing a major blow to efforts to slow global warming.

BP has indicated that it wants to invest heavily in new oil and gas fields in the coming years. But it couldn’t continue these dirty projects without billions in support from big banks. Citigroup, JPMorgan Chase and Wells Fargo, along with a number of other banks, all helped BP grow more than $5 billion last year.

Banks will take center stage at COP29 in Baku, Azerbaijan, as world leaders discuss how to raise hundreds of billions of dollars for countries suffering the effects of climate change.

While the talks are unlikely to address their continued support for dirty energy, more than 140 banks globally have pledged to reduce emissions associated with their loans and investments to near-zero by 2050.

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In May 2021, the International Energy Agency, the global body that coordinates countries’ energy policies, raised the alarm. Any new oil and gas development would make it inevitable that temperatures would rise by more than 1.5 degrees Celsius. In other words, they would destroy the planet.

Meanwhile, engineers at BP’s Shafag-Asiman field were celebrating after finding fossil gas several thousand meters below the seabed. And the bankers were preparing to raise even more billions for BP.

That’s not all. Since May 2021, global banks committed to net-zero policies have poured nearly $1 trillion into companies pursuing oil and gas expansion projects that would push the world beyond its survival limits. All together, these projects would produce nearly seven times the annual emissions of the US, according to an analysis by The Bureau of Investigative Journalismor TBIJ.

“It’s indefensible,” said John Lang, founder of the Net Zero Tracker, which evaluates the net zero plans of major companies. “There is no way we can meet the temperature targets of the Paris Climate Agreement if we continue to finance oil and gas exploration.”

He said banks with net-zero direct and indirect emissions commitments cannot finance oil and gas expansion. “It’s greenwashing, plain and simple.”

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Three years ago, at COP26, a number of major banks went public first promised that by 2050 they would reduce almost all emissions from their loans and investments to zero and invest in financial products to offset the remaining emissions – what has become known as ‘net-zero’. Citigroup for example said It would do this in part by helping its customers transition away from fossil fuels and by stopping financing companies that don’t.

Many banks publicly proclaim their “net-zero credentials.” But Nigel Topping, member of the UK Climate Change Committee, explained that even if banks commit to reducing emissions associated with their financing to net zero, “this will not stop them from financing companies that remain expand (oil production). and gas production).”

Citi CEO Jane Fraser has said: “As the world’s most global bank, we can help drive the transition to a net-zero economy and deliver on the promise of the Paris Agreement.” The bank says it has already exceeded its 2030 target, reducing carbon emissions from energy customers by 38 percent between 2020 and 2022. But the funds it continues to raise for fossil fuel expansions threaten to tie up oil and gas production – and their emissions. until well beyond 2030.

Take the support for BP, that one announced posted record profits in February last year and promptly announced it would scale back its climate commitments and increase investment in oil and gas. It then enlisted the help of Citi and a host of other net-zero banks to raise $5.3 billion – and then invested $4.8 billion in its oil and gas business in the first half of this year.

BP too announced the first oil to be extracted from a new platform in the Azerbaijani sector of the Caspian basin, which is expected to operate at least until 2049, just a year before the world is expected to reduce its dependence on fossil fuels.

BP and Citigroup did not respond to a request for comment. JPMorgan Chase and Wells Fargo declined to comment.

More than 180 companies expanding fossil fuel production have raised money from banks that have committed to net-zero emissions since May 2021, according to an analysis of data from environmental campaign group Rainforest Action Network. Their expansion projects span the globe, from ConocoPhillips in the Arctic Circle to Petrobras at the mouth of the Amazon and Shell in the British North Sea.

A TBIJ analysis of the Global Oil and Gas Exit List, compiled by environmental campaign group Urgewald, shows that these expansive projects could produce nearly 90 billion barrels of oil equivalent, which scientists say should remain in the ground. About half of that is oil and half is gas, according to Urgewald, and calculations suggest that this could produce more than 34 billion tons of CO2 emissions if burned.

Topping said: “The fundamental problem is that the transition is not driven by regulation. … The only people who can change companies are the regulators, and the regulators are failing us.”