Fueling the fire
How the big banks are using our money to support the dirty fossil fuel industry
Photo: Hazelwood Open Mine Fire February 2014 – CFA Communities & Communication
The big banks are funding a huge problem. The coal and gas industry is threatening Australia’s farmland, water resources, health, the environment and natural icons like the Great Barrier Reef. Moreover, the ongoing use of fossil fuels is jeopardising our ability to achieve a safe climate future.
Banks play a critical role in enabling and sustaining fossil fuel projects. Fueling the Fire exposes which banks are supporting the fossil fuel industry and helps you take action to change how these institutions invest.
The figures on this page are current to April 2015. Click here for an update of fossil fuel lending since then.
The Carbon Bubble
If the world is to meet its agreed goal of keeping global warming to less than 2ºC, a third of the world’s oil reserves, half of gas reserves and over 80% of current coal reserves cannot be burned.
By continuing to support fossil fuel companies and projects, banks are creating massive economic risks. Failure to keep a lid on global warming would be an economic, environmental and humanitarian disaster. But serious action on climate change also means that fossil fuel companies face major write downs, as they end up owning coal, oil and gas reserves that are effectively worthless. Banks supporting fossil fuel companies to develop bigger reserves are just inflating this bubble even further.
As the world moves to limit global warming, trillions of dollars of fossil fuel assets are at risk in the impending ‘carbon bubble’.
The importance of the “Big Four”
ANZ, CommBank, NAB and Westpac are the four biggest lenders to fossil fuels in Australia. Collectively, they have increased their year on year lending from a total of $5.4 billion in 2008 to $6.8 billion in 2014.
The big four provided $36.7 billion of the total $134.3 billion uncovered in our research, while banks from Japan, the United States, China, France and Britain also featured prominently.
Export Credit Agencies
Export Credit Agencies are semi-governmental financial institutions that are often able to lend much more than commercial banks. Their support is integral to the success of many of the largest fossil fuel projects, such as Australia’s massive LNG export ventures.
|Export Credit Agency||Debt ($AU Millions)||Number of Deals||Country of Origin|
|Japan Bank for International Cooperation||$8,703.40||7||Japan|
|Export-Import Bank of the United States||$4,744.68||4||USA|
|Export-Import Bank of China||$3,397.80||2||China|
|Export Development Canada||$1,433.90||6||Canada|
|Export Finance & Insurance Corp||$1,026.25||1||Australia|
|Korea Exim Bank||$1,026.25||1||Korea|
top lenders by sector
The Bank of China is the largest lender to the coal mining sector in Australia. However, the big four all feature in the top ten list of coal mining lenders.
Australia’s LNG industry is heavily backed by export credit agencies, however the big four still play important roles in funding these huge, dirty projects.
Three of Australia’s big four banks are the major financial supporters of local gas power projects. With $1.5 billion loaned since 2008, NAB is the biggest lender to the sector.
Find out more about where banks are lending in our Tracking the Money series.
Renewable vs. Fossil Fuel Lending
The big four’s lending to renewable energy is vastly overshadowed by their support for dirty fossil fuels.
For every dollar loaned to support renewable energy projects around the world, the big Australian banks have provided far more support for fossil fuels in Australia. The chart above gives a sense of this major disparity.
NAB has the best ratio of fossil fuel to renewable energy lending among the big four banks, but has still loaned 3.3 times as much to fossil fuels as they have to renewable energy since 2008.
ANZ’s lending ratio is almost twice as bad, and CommBank is a major outlier, having loaned 13 times as much to fossil fuels during that time.
Rhetoric vs. Reality
Each of the big four banks likes to talk the talk when it comes to sustainability, and they have all signed up to the Equator Principles as well as a range of other voluntary investment standards. But their massive lending to fossil fuels proves that the reality of each bank’s position on the environment and climate is a long way removed from its rhetoric.
Lending to coal and Gas in the Great Barrier Reef: $2.7 Billion
ANZ will not knowingly support customer activities that significantly impact on culturally or environmentally sensitive areas
Ratio of Fossil Fuel to Renewable Lending: 12.6 to 1
We [CommBank] recognise our role in helping organisations to transition to a low carbon economy
2nd Biggest Lender to Coal Fired Power
We [NAB] have a key role to play in providing finance to assist the transition to a clean energy future
$6 Billion loaned to Fossil Fuels Since 2008
Reducing the emissions intensity of the Australian economy is vital if we are to sustainably position Australia for the challenges of the future
While a number of proposed coal export projects in the Great Barrier Reef World Heritage Area have been shelved recently, plans to expand the Abbot Point terminal are still in place.
One of the largest untapped coal reserves in the world, Queensland’s Galilee Basin has the potential to single-handedly derail efforts to curb climate change.
Is your super invested in fossil fuels?
Chances are your super fund is invested in coal, oil and gas companies that are driving dangerous climate change and impacting the environment and health. Super Switch helps you align your money with your values.
Take action today to make your super fossil fuel free.