Australian banks 'undermining Paris agreement' with $7bn in fossil fuel loans
Since the Paris agreement was signed, Australia’s big four banks have financed new fossil fuel projects that would cancel out the national emissions reduction target 21 times over, according to analysis by the activist investor group Market Forces.
The analysis, released on Wednesday, shows the banks have loaned $7bn to 33 new or expansionary fossil fuel projects between 2016 and 2019.
Market Forces is concerned that, despite each bank making public their climate commitments and investment policies, the sector still loans almost three times as much to finance fossil fuel projects compared with renewables.
The coronavirus recovery is looming as a critical point where financing and policy decisions could redefine the energy market.
The economic taskforce advising the Morrison government has made recommendations calling on taxpayers to underwrite a massive expansion of the domestic gas industry.
At the same time, the global gas market is in crisis, Reserve Bank data has fuelled calls for a post-pandemic renewables push, and the big banks combined have suggested stimulus measures consistent with the Paris targets.
“Yet the [banks] seem singularly unable to get their own houses in order,” the Market Forces research director, Jack Bertolus, said.
“No amount of sustainability bluster can mask lending $7bn to new or expanded fossil fuel projects that are entirely inconsistent with limiting global warming to 1.5C.
“Australia’s banks committed to support the Paris climate agreement in 2015. Half a decade later they are wrecking its chances of success by continuing … to funnel billions into new polluting projects and companies dragging us in the wrong direction.”
Wednesday’s report listed 33 projects financed by the major banks since 2016, including the proposed third stage of the New Acland coalmine in Queensland (ANZ and NAB) and the Pluto 2 LNG train (ANZ and Westpac) which is part of Woodside’s massive Burrup Hub expansion off the Western Australia coast.
The projects combined could enable the release of 9bn tonnes of carbon dioxide, which is 21 times the federal government’s planned emissions reduction to 2030.
The Guardian last month reported activist shareholders had written to the Commonwealth Bank querying several recent loans to the gas sector, which appeared inconsistent with the bank’s policies that demand it supports only projects consistent with Paris.
The bank’s response was that it considered gas a “transition fuel” that could supplant coal-fired generation. Such claims are increasingly questioned by experts.
“The latest science paints a very clear picture: 1.5C means the world cannot accommodate any new or expanded fossil fuel projects,” the Market Forces report states.
“Our banks must stop financing these activities if their own commitments to support the Paris agreement are to be taken seriously.”
Of the big four, the Commonwealth Bank had the highest total loans to the fossil fuel sector ($12bn) and had loaned the most to expansionary fossil fuel projects ($2.8bn) since 2016.
ANZ had made $2.2bn in loans to expansionary projects; NAB about $1.2bn; and Westpac about $840m.
The NAB group executive for corporate and institutional banking, David Gall, told Guardian Australia that NAB was the only bank to sign up to the United Nations’ collective commitment on climate action and it was constantly reviewing its targets.
“We have an important role to play in supporting our customers and their communities in the orderly transition to a low carbon economy,” Gall said.
He said 69% of NAB’s lending to the power generation sector went to renewable energy sources including hydropower, wind and solar.
“Since 2003, NAB has committed $10bn across 132 renewable energy projects,” Gall said.
An ANZ spokeswoman said the bank’s thermal coal exposure had halved since the Paris agreement was signed.
“While seeking continued reductions in line with our recent trajectory, the nature of these businesses means an orderly transition may not always be a straight line,” the spokeswoman said.
“We have been working closely with a number of our customers in recent years to assist them with their plans to transition to a low carbon economy.”