This narrative was originally published by Mother Jones and is reproduced here as a portion of the Climate Desk collaboration.
Each year since the Paris climate arrangement, important planet banks have increased their financing of fossil fuels, pouring $1.9 trillion into the industry from 2016 via 2018. And, it ends up, U.S. banks are the worst criminals, according to a recent report published by a group of environmental organizations.
“The sad reality is that the fossil fuel sector has only grown since Paris,” states Patrick McCully, climate and energy director for the Rainforest Action Network and among the report authors. “The banks are following what the industry is doing, and the industry’s able to expand because it’s able to keep getting capital from the banks … It’s just this really alarming, really terrifying dynamic going on worldwide.”
The leading four financial institutions supporting the fossil gas industry are American: JP Morgan Chase, Wells Fargo, Citi, and Bank of America. Two more, Morgan Stanley and Goldman Sachs, are not far behind. This is despite all six of these significant U.S. banks publishing a joint announcement, in the months leading upward to the adoption of the Paris deal, acknowledging the danger of climate change, pledging financial aid for solutions, and calling to get a “more sustainable, low-carbon economy.”
By much, JP Morgan Chase is the biggest funder among the 33 banks evaluated, putting $196 billion into fossil fuels from 2016 via 2018. Its currency represents 10 percentage of the industry’s overall financing. Notably, the highest spending year for Chase — and also a number of other leading banks — has been 2017, the same season President Trump declared the U.S. would pull from the Paris arrangement.
In recent decades, public pressure has mounted against banks financing oil, gas, and coal companies. These campaigns are particularly coordinated and effective in Europe, and the World Bank declared in 2017 it would not finance oil and gas extraction. The same calendar year, France-established PNB Paribas committed to end service of shale and tar sands businesses, and last year, British multinational HSBC ceased financing offshore oil and gas jobs in the Arctic.
“There’s new legislation and national legislation in European countries that are forcing banks to move in the right direction much, much quicker than the U.S. banks,” McCully states. “[U.S. banks] do not feel the same kind of public anxiety, also they definitely do not believe the same type of political pressure.”
Efforts and achievement in the U.S. have been more limited. The most stress so much has come from activists, led by indigenous groups, which have led banks supporting the Dakota Access pipeline. Protesters also have rallied outside Chase and Wells Fargo within their fossil fuel funding in the past several decades. But the United States is dwelling to a number of the planet’s biggest oil and gas companies, including Exxon Mobil, Chevron, and ConocoPhillips, and the industry holds enormous political influence, particularly since U.S. production of fossil fuels has surged over the centuries. In 2018, lobbying for oil and gasoline topped 124 million — more than twice what it had been 15 years past — putting significant stress on politicians to resist climate action despite dire warnings against the Intergovernmental Panel on Climate Change which the planet has only more than a decade to behave to prevent tragedy.
“Our financial system is basically not responding to that threat at this point,” states Yossi Cadan, the senior worldwide campaigner on divestment for 350.org. “The notion that politicians are not going to act is the current financial assumption. And if you think like that, and you say, OK, politicians are not going to regulate the extraction of fossil fuels … then we may be able to burn everything that we have and make a profit out of it.”
Still, banks have made public commitments in recent decades to finance sustainable companies and jobs or to move carbon-neutral. Last year, Wells Fargo, the second biggest fossil fuel funder, committed $200 billion in financing through 2030 to jobs and businesses concentrated on transitioning to a low-carbon market. In 2017, the institution invested $12 billion in sustainable businesses — but it place more than four times that toward financing fossil fuels the year.
Citi, Bank of America, and Chase have made similar statements, all which pale in comparison to their fossil gas financing. In 2017, Chase declared it could be 100 percentage renewable energy–reliant by 2020 and committed $200 billion in clean energy financing by 2025. But it has spent nearly the same sum financing fossil fuels in only the previous 3 decades. And while Chase CEO Jamie Dimon publicly criticized President Trump’s decision to pull from the Paris arrangement, the lender’s longest sitting board member is Lee Raymond, the former board chair and CEO of Exxon. Well famous for his public skepticism of climate change, Raymond directed Exxon during a time when it had been pouring tens of millions of dollars into funding climate change denial.
The report also shows Chase is the leading financier of three big categories of fossil gas endeavors — Arctic oil and gasoline, ultra-deepwater drilling, and liquefied natural gas — and it is also the leading U.S. banker for others: tar sands oil and coal mining. It is next only to Wells Fargo in financing fracking. Chase did not respond to asks for comment from Mother Jones.
The wide increase in fossil gas funding comes as numerous individuals consider fossil fuels to be economically unsustainable. Oil and gasoline companies face the possibility of stranded resources if authorities tighten environmental regulations, if electricity requirement shifts toward renewables, or if companies face litigation and increased scrutiny from worried shareholders — most of which are now underway. The coal industry in the U.S. is on its final legs, despite the Trump administration’s attempts to prop it up. About 75 percentage of U.S. coal production is more expensive than solar or wind power, according to a report published this week. And it’s getting tougher for the industry in general to earn money. Yet oil companies have continued to aggressively chase fossil fuel growth, and the planet’s important banks are supporting them. Alarmingly, the new statistics demonstrates banks (again, directed by Chase) place $600 billion behind the 100 companies most concentrated on expanding fossil gas production, accounting for nearly one-third of fossil gas financing.
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“Even if the bank thinks in seven years it might be a problem, they say, ‘Well, we’ll be out of here in three years,’” McCully states. “You say economically why would they do it, but even morally why would they do it? If they think they’re leaving this completely decimated world to their kids and grandkids, wouldn’t they want to do something about it? But it just seems like they’re unable to look beyond the next quarter, maybe the next year. They just don’t have long-term economic or moral vision.”
As banks become increasingly crucial to the potential of fossil fuels, they may play a particularly critical part in the fight to decrease greenhouse gas emissions and slow global warming. Without the assistance of banks, U.S. coal companies are decimated since a lack of liquid resources makes them reliant on loans, Cadan points out. And while oil companies have sufficient resources to finance themselves for a while, it’s mostly unsustainable long term, especially since without financing, new investments are increasingly risky and expensive. Banks “can determine the pace of how we combat climate change,” Cadan says. “It’s black and white. With the help of financial institutions we can easily be in a different space. If they take real action.”
“Ultimately, it doesn’t matter how many solar panels we have,” McCully adds. “If we’re still building lots more coal plants and oil fields, clean energy is not going to help.”