European banks led by HSBC, Barclays, and BNP Paribas continue to provide financing for oil and gas exploration despite government efforts to reduce economies' reliance on fossil fuels, a report by a nonprofit investment organization has said.
"Climate scenarios such as the IEA's Net Zero Emissions pathway show that there is no room for investment in new oil & gas fields if the world is to limit warming to 1.5C," the report, by ShareAction, said.
"Yet 25 European banks, all committed to Net Zero goals, provided $55 billion in financing to companies expanding oil & gas production last year," the authors added.
It's worth noting here that while the International Energy Agency did call for an immediate end to new investments in oil and gas exploration in May last year to advance is Paris Agreement goals, its October Oil Market Report called for the opposite, saying, "Shrinking global spare capacity underscores the need for increased investments to meet demand further down the road."
The ShareAction report, however, focuses on the IEA's Road Map to Net Zero, which argued that if we are to have a 50-percent chance of limiting global warming to 1.5 degrees Celsius, new oil and gas exploration must cease immediately.
Banks, however, are not heeding the warning, with the authors of the report saying that 25 of the largest European lenders provided some $400 billion in financing to big oil companies, including Exxon, Shell, BP, and Aramco since 2016.
What makes the findings of ShareAction significant is that 24 of these 25 lenders are members of the Net Zero Banking Alliance set up by the United Nations. Since joining the alliance, ShareAction said, these 24 banks had provided $33 billion to oil and gas companies. More than half of this total came from four banks: HSBC, Barclays, BNP Paribas, and Deutsche Bank.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
I think they should read the Net Zero Banking Alliance agreement again. But perhaps I have misread it. Anyone have a copy? (Non-carbon, of course.)
How could international oil majors invest heavily in expanding global spare oil production capacity without securing financial support from banks? That is the real dilemma.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London