Banking & Finance

Banks Boosted 2017 Lending to $114 Billion for Fossil Fuel Projects

Mining for coal and exploring for oil and natural gas are expensive undertakings, and miners and exploration and production companies depend on bank financing to help fund these often massive projects. For the three-year period from 2015 through 2017, the top 36 global banks supplied the fossil fuel extraction industry with more than $345.3 billion in financing.

The data were included in the ninth annual “Banking on Climate Change: Fossil Fuel Finance Report Card 2018,” released Wednesday and sponsored by a coalition environmental groups, including the Rainforest Action Network, Banktrack, the Sierra Club, Oil Change International, Indigenous Environmental Network and Honor the Earth.

The report grades banks on their policy commitments to financing “extreme” fossil fuel projects. The report card classifies “extreme fossil fuels” as “extreme oil (tar sands, Arctic, and ultra-deepwater oil), liquefied natural gas (LNG) export, coal mining, and coal power.” The more banks and energy companies spend on fossil fuel extraction, the greater the risk to meeting climate change goals.

The 36 banks analyzed in the report card provided $126.3 billion in financing for extreme fossil fuel projects in 2015. That total dropped to $104.02 billion in 2016 before rising to $114.96 billion in 2017. Rising prices for crude oil and expanding markets for LNG account for most of the year-over-year increase of more than 10% recorded in 2017.

The big change between 2016 and 2017 was attributed to a substantial increase in financing directed to tar (oil) sands projects in western Canada. Over the three-year period covered by the 2018 report card, the Royal Bank of Canada (NYSE: RY) provided a total of $21.7 billion in financing for tar sands related projects, Toronto-Dominion Bank (NYSE: TD) provided $16.84 billion and JPMorgan Chase and Co. (NYSE: JPM) provided $10.89 billion. The total investment by all 36 banks in tar sands projects (including pipelines to move the oil to market) totaled $97.55 billion, just over 28% of the total lending for the period.

The banks making the largest investments in coal mining were all China-based: China Construction Bank topped the lending with $12.61 billion over three years, followed by Bank of China ($9.46 billion) and Industrial and Commercial Bank of China ($8.22 billion). The three banks also made the largest loans to the development of coal power generation plants.

Here are the rankings, the three-year financing totals and the overall grade for the six largest U.S. banks:

  • JPMorgan: third; $26.12 billion; D+
  • Citigroup Inc. (NYSE: C): ninth; $4.67 billion; C−
  • Bank of America Corp. (NYSE: BAC): 10th; $13.62 billion; D
  • Morgan Stanley (NYSE: MS): 13th; $10.08 billion; C−
  • Goldman Sachs Group Inc. (NYSE: GS): 16th; $8.99 billion; D+
  • Wells Fargo & Co. (NYSE: WFC): 24th; $4.65 billion; D+

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