Rendering of Woodfibre LNG project; Source: Woodfibre LNG

Bankrolling fossil fuels: 60 giant banks pick up the $7 trillion tab for coal, oil & gas

While global efforts to break away from emission-intensive fossil fuels and pivot to low-carbon and renewable energy alternatives have grown by leaps and bounds since the Paris Agreement came onto the scene, concerns over energy security, rising demand, and population growth have enabled coal, oil, and gas to spread their wings further, with over 60 international banks keeping the fossil fuel players in business by footing the bill for their further expansion rather than cutting off the purse strings.

Rendering of Woodfibre LNG project; Source: Woodfibre LNG

Main takeaways:

  • 60 international banks committed $6.9 trillion over eight years to the fossil fuel industry with $3.3 trillion going to expansion projects
  • Top three banks financing the coal, oil, and gas sectors since 2016 are JPMorgan Chase, Citigroup, and Bank of America
  • Fossil fuels got $705 billion from banks last year
  • Two German banks also pour billions into coal, oil, and gas projects
  • Financing for LNG projects on the rise

In the years following the adoption of the Paris Agreement, the 60 largest private banks in the world financed fossil fuels to the tune of $6.9 trillion, based on a recent report, titled ‘Banking on Climate Chaos,’ which was published by the U.S. organization Rainforest Action Network (RAN), together with Urgewald and six other international partners. These environmental and climate groups oppose the funding of fossil fuel projects on climate grounds.

During the past eight years, $3.3 trillion went to fossil fuel expansion, while banks backed coal, oil, and gas with a total of $705 billion in 2023, with $347 billion going to companies that continue to widen their fossil fuel businesses. This report dives into the extent to which the banks have supported more than 4,200 players in the fossil fuel sectors with loans and securities transactions or underwriting since 2016.

April Merleaux, Research and Policy Manager at Rainforest Action Network (report’s co-author), emphasized: “Wall Street’s biggest concern is profit, our main concern is climate and human rights. While the banks profiting from climate chaos create new greenwashing tales every year, our data shows how much money they are actually pouring into fossil fuels.

“Our report’s new methodology uncovers previously unknown details about bank financing of fossil fuels and gives activists new tools to confront the banks. Our data shows that bank financing of fossil fuels is not declining nearly fast enough. In 2023, nearly $350 billion has flowed to fossil fuel companies, incompatible with real climate commitments.”

Three banking giants’ love affair with fossil fuels

The report pinpoints JPMorgan Chase as the world’s number one provider of fossil fuel financing, which committed $40.8 billion to fossil fuel companies last year alone. This U.S. bank is said to also lead the pack in bankrolling fossil fuel expansion in 2023.

The next bank on the list is Japan’s Mizuho, which moved up in this year’s report to second place internationally for both total fossil fuel financing, amounting to $37 billion, and also fossil fuel expansion backing, totaling $18.8 billion.

Gerry Arances, Executive Director of the Center for Energy, Ecology & Development (report’s co-author), said: “In recent months, communities across Southeast Asia have suffered from dangerously high temperatures. Every dollar that continues to flow into fossil fuels is a death sentence for climate-vulnerable people in our region. Southeast Asia does not need this massive gas expansion, which threatens to tie it to a fossil future and increasing climate chaos.

“We have more than enough renewable energy potential to completely move away from coal and all other fossil fuels. In this way we could also become more resilient. Every dollar that still flows into fossil fuels is an obstacle to this transition. It is the historic carbon polluter nations that largely drive fossil fuel financing. The Japanese government, for example, is the largest financier of the fossil gas industry in Southeast Asia through its wholly owned subsidiary Japan Bank for International Cooperation. This has to stop now.”

According to the report, Citibank has been identified as the largest donor to the expansion of fossil fuels since the Paris climate agreement came into force, as the U.S. bank has provided a total of $204 billion for such companies since 2016.

Katrin Ganswindt, Head of Financial Research at Urgewald (report’s co-author), stated: “While the world urgently needs to phase out coal, only 5 percent of global coal companies have announced exit dates for their core business. And while operating oil and gas wells are more than enough to power us through 2050, 96 percent of oil and gas producers continue to develop new fossil fuel assets.

“Banks that finance this fossil fuel ignorance are complicit in the destruction of our climate. Pioneers like Crédit Mutuel or La Banque postale with strong climate policies show the way to a climate-friendly financial industry.”

German banks splurge billions on fossil fuels

While analyzing the situation in Germany, the report focuses on the results for Deutsche Bank and DZ Bank, the central institution of the German cooperative banks, with the collected data showing that the former set the tone for fossil financial transactions.

In line with these findings, Deutsche Bank granted almost $13.4 billion to fossil fuel companies in 2023, with $9.2 billion through loans and $4.1 billion through securities transactions. On the other hand, DZ Bank lent $2.5 billion to fossil fuel industries last year. 

Pitting these two banks against their international peers for comparison’s sake indicates that Deutsche Bank ranks 22nd among the most important banks in the fossil fuel industries over the entire study period from 2016 to 2023 with $132.4 billion while DZ Bank is in 57th place with $12.4 billion.

The report was unable to discern a clear pattern at Deutsche Bank in the 2021 to 2023 period, as it provided fossil companies with around $13 billion in 2021, after which the value fell to $10 billion in 2022, only to rise significantly again to $13.4 billion in 2023, representing the same level as in 2020.

Furthermore, Deutsche Bank was third on the list of the largest banks for fossil fuel industries within Europe, after Barclays ($24.2 billion) and Santander ($14.5 billion). In contrast, the report has established a clear negative trend at DZ Bank.

The bank’s fossil financing has increased continuously at an internationally low level since 2020, with $1 billion in 2020, $1.2 billion in 2021, $1.9 billion in 2022, and $2.5 billion in 2023, marking the highest value of fossil financing ever measured.

The data shows that the same applies to DZ Bank’s financing for companies on a fossil fuel expansion path, which it supported for the first time with almost $1 billion in 2023, after $134 million in the previous year.

Regine Richter, Finance and Energy Campaigner at Urgewald, commented: “Deutsche Bank and DZ Bank have a weak balance sheet overall. While Deutsche Bank shows no clear trend towards phasing out fossils despite loud climate rhetoric, DZ Bank has actually significantly expanded its fossil commitment.

“With such transactions, for example in the liquefied natural gas sector, Deutsche Bank and DZ Bank are exacerbating the climate crisis. Above all, they are endangering our climate future by spending billions on fossil fuel expansionists. As an immediate measure, they must end all fossil fuel expansion financing and reduce financial transactions with coal, oil and gas to zero in the near future.” 

Deutsche Bank made the largest amount available, almost $1.3 billion, last year to Enbridge, which is planning the Woodfibre LNG project and the construction of Line 3, a pipeline that will transport oil sands from Alberta, Canada, to the United States.

The report outlines the changes in global trends within individual fossil energy sectors, with some showing a boost in financing from 2022 to 2023 while others have experienced a decrease. One of the sectors that has seen an increase in financing is liquefied natural gas (LNG) with total bank financing for LNG jumping to $120.9 billion in 2023.

The list of the most important banks for the 130 companies that expanded their LNG businesses in 2023 encompasses Mizuho (Japan), MUFG (Japan), Santander (Spain), RBC (Canada), and JPMorgan Chase (U.S.).

Gas-fired power generation did not fare as well as LNG last year, as it saw a drop in financing compared to 2022 with banks examining committed $108 billion to 252 companies expanding their activities in the gas-fired power plant sector. The analysis of the collected data highlights that the three largest donors were Mizuho, ICBC (China), and MUFG.

The investment in fossil expansion took a downturn in 2023, as the 60 banks covered in the report provided $347 billion to 873 companies expanding fossil fuel businesses, including Enbridge, Vitol, TC Energy, and Venture Global. This is compared to the $385 billion banks put into fossil fuel expansion in 2022.

The downward trend is also evident in the backing of tar sands oil projects, as the 36 largest tar sands companies worldwide received $4.4 billion in financing in 2023, a decrease of $4 billion from the previous year. As Canadian banks provided 49% of these funds, the largest donors were the country’s CIBC, RBC, Scotiabank, Toronto-Dominion Bank, and Japan’s Mizuho.

Investments in fracking indicate the same downswing, as financial commitments to 236 fracking companies amounted to $59 billion in 2023. The U.S. banks dominate this sector, thus, the largest lenders were JPMorgan Chase, Wells FargoBank of AmericaGoldman SachsCitigroup, and Morgan Stanley.

Regarding deepwater oil and gas production, Japanese banks –  MUFG, Mizuho, and SMBC Group – were the largest lenders for the 66 companies active in deep-sea oil and gas production in 2023, with financing totaling $3.7 billion in 2023, a decrease from 2022. 

The funding for Arctic oil and gas deals also saw a fall, as the financing for 45 companies involved in the Arctic oil and gas industry went down from $3.3 billion to $2.4 billion in 2023. The banks that provided the most funding to this sector were UniCredit (Italy), Citigroup (U.S.), Intesa Sanpaolo (Italy), Barclays (UK), and Credit Agricole (France).

Moreover, financial support for oil and gas transactions in the Amazon also declined. Bank of America tops the list of the most important banks with $162 million for 24 companies that extract oil and gas in the Amazon region. JPMorgan Chase follows in second place with a gap of $33 million while the total financing for the sector was $632 million in 2023, down from $802 million the year before. 

“In a year of record climate impacts, I am shocked that funding for individual fossil fuel sectors has actually increased. In 2023, there was a sharp increase in financing for companies developing LNG terminals and related infrastructure. Banks should listen to those on the front lines of the consequences and pull out of these projects,” added Merleaux.