Welcome to “Feet to the Fire: Big Oil and the Climate Crisis,” a newsletter in which we share our latest reporting on how the fossil fuel industry drives climate change and influences climate policy in five of the nation’s most important oil and gas-producing states. In addition, we shine a spotlight on the financing of the fossil fuel industry, holding banks and other financial institutions accountable for their role and providing you with updates on their activities.
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New Proposal to Drill Wells in Denver Region Could Make Colorado’s ‘Ozone Season’ Even Worse
Despite the fact that emissions from energy industry operations and traffic have caused the metropolitan Denver area to fail federal air quality standards in recent decades, state regulators are mulling proposals to drill new wells in the region. On July 30, a hearing is scheduled regarding the 156-well Lowry Ranch proposal, which would involve drilling along the southeastern edge of Denver, underneath a reservoir for the region’s drinking water. According to a consultant hired by the operator behind the proposal, the project would emit “hundreds of tons of smog-forming compounds per year, as well as tens of thousands of tons of climate warming gases,” reports Capital & Main’s Jennifer Oldham.
New Mexico’s Ability to Enforce Its Oil and Gas Regulations Is Under Threat, Say Environmentalists
New Mexico, which has some of the toughest oil and gas industry rules in the country, keeps finding clean air violations that could lead to health problems and exacerbate the climate crisis. Most recently, an inspection sweep by state regulators and the U.S. Environmental Protection Agency found that at the most productive oil field in the nation, 75 out of 124 facilities were emitting volatile organic compounds, which contribute to the formation of ozone, reports Capital & Main’s Jerry Redfern. State regulators expect to see an increase in the number of facilities committing violations, but they are underfunded and lack the staff to enforce rules.
Beyond Protests, Here’s How to Stop Banks Funding of Fossil Fuels
Climate activism usually involves street protests, shareholder resolutions and sometimes throwing paint at art masterpieces. But the Paris-based nonprofit Reclaim Finance takes a different approach — closely tracking major banks and financial institutions and their financing of fossil fuel production. “We focus more on financial flows and less on the exposure of financial institutions to fossil fuels because what they have in their book is really the result of past financial services and what is done is done,” the group’s founder and director Lucie Pinson tells Bloomberg.
How Australia’s Big Banks Offer ‘Backdoor Finance’ to Fossil Fuels
Despite making major commitments to climate goals, Australia’s biggest banks — ANZ, Commonwealth Bank, NAB and Westpac — loaned $2.43 billion to indirectly finance fossil fuel projects in 2023, according to a new report by the nonprofit Market Forces. The lending is done with general-purpose corporate loans and bonds, rather than direct project loans — making them more difficult to tie to specific activities — according to the group, which found that the banks have loaned up to $61 billion to finance fossil-fuel activity since the Paris climate agreement in 2015. Last year marked the first time that those banks stopped directly financing or expanding oil, gas and coal projects since 2015. “Customers are very concerned that big banks are pouring billions of dollars into companies expanding coal, oil and gas when we must accelerate efforts to limit climate change and deadly disasters,” said Kyle Robertson, author of the report.
Canadian Bank Execs Questioned Over Fossil-Fuel Financing
Top execs at Canadian banks were grilled by members of Parliament about their failure to show how they plan to reach their net-zero goals by 2050. A greater share of their financing goes to oil and gas production versus clean energy solutions when compared to their global peers, according to Bloomberg research cited by the nonprofit Corporate Knights. “When will you stop the greenwashing and doublespeak with climate plans when really you’re the companies pouring fuel on the fire?” asked one parliamentarian. When another member of Parliament, Leah Taylor Roy, asked Bank of Montreal’s CEO if he would commit to investing only in oil and gas projects that reduce emissions, he responded that he was “committing to continuing to finance our clients.”
Vanguard Leads Institutional Investors That Dominate Investment in Fossil Fuels
When it comes to the financing of fossil fuel production, most of the focus is on banks — but a new report reveals the giant role played by institutional investors, which collectively hold $4.3 trillion in bonds and shares of fossil fuel companies, according to the new Investing in Climate Chaos report published by German environmental nonprofit Urgewald. The report examined the holdings of more than 7,500 pension funds, insurance companies, asset managers, hedge funds, sovereign wealth funds and the asset management arms of commercial banks. U.S. institutional investors dominate such financing, holding more than $2.8 trillion in fossil fuel companies in 62 countries, which equals 65% of the total global institutional investments in the sector. The world’s biggest fossil fuel investor is American asset management giant Vanguard, which holds assets of oil, gas and coal companies worth $413 billion.
Private Credit Helping Finance Non-ESG-Aligned Companies
As more banks pull away from financing the fossil fuel sector, players such as private credit funds are filling the gap. Balmain Corporation, an Australian private credit provider, recently announced that it is raising money to finance companies — such as those that sell equipment to coal miners — that are not aligned with environmental, social and governance (ESG) principles. “[Some private credit providers] are trying to appeal to investors with a contrarian view on climate change — that investments in fossil fuels could be valuable if the transition is slower than generally expected,” Rory Simington, a resources analyst at Wood Mackenzie, told the Australian Financial Review.
