France’s largest bank to halt financing of shale oil projects
BNP Paribas SA has pledged to stop financing shale and oilsands projects, expanding earlier commitments in support of global efforts to tackle climate change.
France’s largest bank will no longer do business with companies whose main activity stems from oil and natural gas obtained from shale or oilsands, it said in a statement on Wednesday. The policy covers companies involved in activities ranging from exploration to marketing and trading. The bank added that it won’t fund oil or gas projects in the Arctic region.
BNP Paribas said it’s committed to bringing its financing and investment activities in line with international efforts to keep global warming below 2 degrees by the end of the century. Achieving that goal relies on reducing the world’s dependence on fossil fuels, starting with energy from shale and oilsands, the bank said.
Echoing environmentalists on a disputed subject, the bank said the extraction of fuel from these sources emits high levels of greenhouse gases and harms the environment in other ways.
BNP Paribas may be the first large bank to blacklist shale oil, which has enabled the United States to curb oil imports and pushed down energy prices.
Once a global leader in oil financing, BNP has withdrawn from funding coal mines and coal-fired power plants in recent years, along with other big European banks including Societe Generale SA, HSBC Holdings PLC and Credit Agricole SA. Energy excluding electricity represented 4 per cent of BNP’s total lending commitments, down from 6 per cent in mid-2015, according to its filings.
“Our role is to help drive the energy transition,” CEO Jean-Laurent Bonnafe said in the statement. “We’re a long-standing partner to the energy sector and we’re determined to support the transition to a more sustainable world.”
U.S. oil and gas output has surged over the past six years as drillers unlocked oil trapped in shale formations, partly by injecting water, sand and chemicals under high pressure to crack open reservoirs. Banned in France, the process known as hydraulic fracturing — or fracking — has been at
We’re determined to support the transition to a more sustainable world.
the centre of controversies about contaminating water sources and causing earthquakes.
Meanwhile, investor sentiment toward oilsands has soured as prices halved from above $100 a barrel over the past three years, with Royal Dutch Shell PLC selling out of its oilsands assets in Alberta.
Last year, BNP decided to halt further development of its reserve-based lending business, the key avenue for financing shale companies. In 2012 the bank sold its reserve-based lending activities in the U.S. and Canada to Wells Fargo & Co., including US$9.5 billion of loans.
BNP also repeated its target for 15 billion euros in financing for renewable energy projects by 2020 and 100 million euros of investment in startups in areas such as power storage and efficiency.