Major banks lent $3.6b to fossil fuel projects in 2023 using a ‘back door’

by Admin
July 16, 2024

Major banks lent .6b to fossil fuel projects in 2023 using a ‘back door’

In short:

Australia’s big four banks loaned $3.6 billion to fossil fuel companies and their projects in 2023, analysis has shown.

Projects financed include Woodside’s Scarborough operations, Santos’ gas fields in the NT and pipelines planned for the fracking of the Beetaloo Basin.

What’s next?

CommBank and ANZ have emphasised their renewable investments as well as commitment to net zero targets.

Australia’s largest banks have continued to lend billions of dollars to fossil fuel projects as the spectre of the sector’s climate commitments hangs over them.

A report released on Tuesday details how the big four banks — ANZ, NAB, Westpac and Commonwealth Bank — collectively lent $3.6 billion to fossil fuel projects or companies throughout 2023.

The analysis from environmental advocacy group Market Forces, which focuses on the investments of financial institutions like super funds and banks, details how the four banks have totalled $61 billion in lending to the fossil fuel industry since the signing of the Paris Agreement in 2015.

The agreement, an international treaty to which Australia is a party, focuses on limiting global temperature rises below 2 degrees Celsius with the goal of 1.5C.

Kyle Robertson, banks analyst at Market Forces, told ABC News Radio the sector had pivoted towards “back-door” approaches to financing as direct support for oil and gas projects dried up.

Arranging investment through the bond market or corporate lending are both examples of what Mr Robertson described as methods that still enable lending to expansions of coal, oil and gas projects.

“We’re really concerned about this back-door type of financing,” he said.

“The big four banks are engaged in a monumental facade as long as they continue undermining a safe climate by funnelling billions to companies steaming ahead with more coal, oil and gas,” he said.

Some of the projects financed include Woodside’s Scarborough LNG gas field off the coast of Western Australia and the offshore LNG Barossa fields north of Darwin operated by Santos.

Woodside’s Scarborough project is expected to start exporting LNG in 2026.(Supplied: Woodside)

ANZ and Westpac both contributed to a $1.25 billion loan to APA Group, a company contracted to supply pipelines which will be used to transport gas produced by fracking the Beetaloo Basin in the Northern Territory — a project estimated to emit 1.2 billion tonnes of C02 by 2050 by policy institute Climate Analytics.

ANZ, which made $7.4 billion in profits in 2023, loaned $903 million over the course of the year to fossil fuel companies as well as arranging $1.5 billion in bonds for oil and gas projects.

Bonds are a type of financial asset that functions as a loan, where the investor is lending to the company in a fixed-term agreement.

A spokesperson from ANZ said they had “significant questions about the methodology of the report”, but said they were “not surprised to be mentioned given we are the largest domestic lender to Australia’s energy sector”.

“It’s important to remember this is the most carbon-intensive part of our economy and financing its transition to net zero will require significant capital,” they said.

The biggest lender of the group was NAB, with $1.4 billion in loans including $859 million going directly to companies expanding fossil fuel projects.

Westpac and CommBank lent $533 million and $271 million respectively, with both banks still engaging in extensive financing of coal and gas projects.

The four big banks lent a total of $3.6 billion to fossil-fuel related companies or projects last year.(AAP)

CommBank’s 2023 climate report states that it intends to stop lending to thermal coal customers such as Glencore by 2030, with 2022 loans to the sector totalling $47 million.

A spokesperson for Westpac said 84 per cent of its lending to the electricity generation sector was in renewable projects, as well as referencing a 7 per cent decline in total exposure to fossil fuel companies in the year to September 2023.

The report’s data was gathered from finance industry databases such as Bloomberg as well as company filings and market disclosures, and focuses on loans and bonds both new and refinanced.

Posted Yesterday at 4:06amTue 16 Jul 2024 at 4:06am, updated 9 hours agoWed 17 Jul 2024 at 2:25am