The ninth annual report from a consortium of environmental and indigenous organizations researching which banks are funding extreme fossil fuel extraction projects found that investments increased by $115 billion in 2017. “Banking On Climate Change: Fossil Fuel Finance Report Card 2018,” grades global bank investments in tar sands extraction, as well as drilling in ultra-deep water and in the Arctic.
The report card looked at 36 banks based in North America, Europe, Asia and Australia and found that funding for tar sands extraction in particular increased by 111 percent between 2016 and 2017. Among U.S. banks, JP Morgan Chase was way out ahead as the largest funder of extreme fossil fuels.
Between The Lines’ Melinda Tuhus spoke with Lorne Stockman, senior research analyst with the group Oil Change International, which collaborated with Rainforest Action Network and other groups in producing the Banking On Climate Change report, which provides data analysis on the oil and gas industry. Here, Stockman explains what led to increased investment in fossil fuels and describes the impact of the grassroots fight against climate change and community-destroying extreme energy extraction.
LORNE STOCKMAN:I think the main point of the report with regard to banks is that most banks are still not implementing any screens aligned with the Paris climate agreement. While some banks are paying lip service to climate change and aligning their investment policies with the Paris agreement, most banks, particularly in North America – in the U.S. and Canada – have not taken that seriously yet. There are a handful of banks that have begun to take these issues more seriously; most of these are based in Europe, that have started to implement policies where they are excluding finance to coal in particular – in some cases, to tar sands. But at the moment, we don’t see any of these banks actually starting to exclude financing of the expansion of fossil fuels, whether it’s coal, oil or gas.
The Canadian and American banks have continued financing new oil and gas projects in the zones this report focuses on – the Arctic, the tar sands and the ultra-deep water. In terms of the companies – so, we have seen companies like Shell and Conoco pull out of tar sands in the last year. And what they did was they sold their assets in the Canadian tar sands to other companies already operating there, primarily Canadian companies like Cenovus and CNRL, Canadian Natural Resources. The reason financing from banks for the tar sands went up last year is that the banks helped Cenovus and CNRL finance those asset purchases. The Canadian companies have kind of doubled down and bought those assets from the international companies that have pulled out and the banks have helped them finance that.
BETWEEN THE LINES: What connection, if any, do you see between the intense grassroots organizing – especially that led by indigenous people – and any of the pullouts of fossil fuel companies?
LORNE STOCKMAN: Absolutely. I mean I think we see all over the world that indigenous communities are often on the front lines of extractive industry activities, whether it’s mining or oil and gas extraction. So in Canada, First Nation territories have been threatened in particular by pipelines traveling through, or threatened to travel through, British Columbia, and First Nations have been at the forefront of opposition to those proposed pipelines. The Northern Gateway pipeline proposed by Enbridge has been stopped; is no longer being proposed by that company. More immediately, the Kinder Morgan Trans-Mountain pipeline is being fiercely opposed as we speak. It’s got a permit from the Canadian federal government, but it’s being opposed in British Columbia and First Nations are at the forefront of that fight. Native communities in the U.S. have also been at the forefront of fights against tar sands pipelines: Keystone XL and Enbridge Line 3 in Minnesota. The federal government has approved Line 3 in Canada, but it’s got to get through Minnesota right now, which is the roadblock for that particular project at the moment; it’s still going through the regulatory process in Minnesota and has come under intense scrutiny.
On the whole, the federal government in Canada, whether it was under the more right-wing Stephen Harper in the past; the current prime minister Justin Trudeau – they have been supportive of these pipeline projects, but what we’re seeing increasingly is at the provincial level there’s more opposition, whether it’s in British Columbia or Quebec or Ontario.
BETWEEN THE LINES: I’ve read opposite things – that activity in the tar sands has dropped and also that it’s increased. Can you clarify that?
LORNE STOCKMAN: The thing about the tar sands is that the projects have an extremely long lead time; there’s a lot of construction and processing facilities that have to be built before a project can start. So there’s a bunch of projects that are just coming on-stream this year that construction was started three, four, five years ago, so they were started when the oil price was very high; when the success of the anti-pipeline movement was not as clear, so they were anticipating much more pipeline capacity to get that production to market. What happened is they went ahead with those investment decisions – committed billions and billions of dollars to constructing those projects, and when the oil price crashed they kept going because they’d already sunk capital in, and they figured, given some time, oil prices would come back up again, and we’ll get some pipelines through.
So, production is growing in Alberta and the tar sands, but nobody’s actually mandated a new project for the last two or three years. It’s still a very marginal enterprise to be expanding the tar sands. It’s something that shouldn’t be happening when we factor in climate change and where we need to be going to reduce our dependence on oil and gas and other fossil fuels. So, you know, the future of the tar sands is very much in the balance, very much at risk right now.
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