1 October 2015
As the banks’ AGMs rapidly approach, we thought it would be useful to check in with our latest research and see what stories have come out of the fossil fuel lending numbers so far this year. All data quoted below is taken from our research into fossil fuel lending in Australia throughout the first half of 2015.
Overall, big four lending to fossil fuels has been slightly down on recent years, with the total amount loaned in the first half of the year sitting just below $2 billion. While it would be nice to think that this is a result of a shift in the big banks’ lending policies, the reality is that uncertain economic conditions have seen far fewer projects reach financial close in 2015 than in recent years. The rush of hugely expensive LNG projects that we’ve seen go ahead over the past few years has finally slowed up, bringing the lending totals down significantly.
The public pressure that has been heaped on Adani’s Carmichael mega mine project has helped keep that disastrous proposal from reaching financial close, and with CommBank and NAB distancing themselves from the project, it’s looking less and less likely to attract the $16.5 billion in finance required to go ahead. Although it’s worrying to note Westpac and ANZ are lagging on this issue, having not yet ruled out Carmichael involvement.
It is also concerning that money has continued to flow from the big four to dirty new fossil fuel projects and companies.
In early 2015, each of the big four committed $100 million to a refinancing deal for the filthy Maules Creek coal mine. On top of this, Westpac, ANZ and NAB each stumped up $352 million in corporate finance for Maules Creek’s operators, internationally recognised climate villains Whitehaven Coal.
Incredibly, these two deals account for over 75% of all big four lending to fossil fuels so far this year. This is for a company and project that are so vehemently opposed by the community that the mine site was blockaded for almost two years! Don’t the big banks have any regard for the reputational risks associated with supporting such a dirty project?
More fossil fuel support
Unfortunately, big bank money has also been propping up the dirtiest industry of all, with Westpac providing $64.5 million to help refinance the Millmerran coal-fired power station in Queensland. Also in 2015, CommBank loaned some $87 million to the gas-fired Karratha power station.
In a further worrying sign, Westpac, CommBank and ANZ all participated in a refinancing deal for AWE, a company that specialises in searching for and developing new fossil fuel reserves around Australia and abroad. Westpac and CommBank stumped up the lion’s share, providing $150 million and $125 million respectively, while ANZ contributed $45 million to the deal.
Changes in the big four’s lending
While lending across the board has been down, there have been some interesting changes in the proportion of lending provided by each of the big four. The most significant and worrying trend of 2015 has been Westpac’s emergence as the major lender to fossil fuels. Having never provided more than 21% of the big four’s total fossil fuel lending in any year since 2008, Westpac is currently sitting at 35%. This eclipses even ANZ, who have dropped back from 46% last year to 26%. NAB have slightly increased their percentage of debt provided from 20% in 2014 to 23% in the first half of 2015.
CommBank have somewhat surprisingly provided the smallest proportion, dropping from 23% in 2014 to 16%. This continues the trend that saw the bank scale back their share of big four fossil fuel lending from over 40% in 2013. Hopefully it’s a sign of things to come from the bank that has consistently been one of Australia’s worst offenders in lending to dirty industries.
So all in all, an interesting year so far for fossil fuel finance in Australia. While it is good to acknowledge that some banks are heading in the right direction, we have to remember that any lending to fossil fuels is locking us in to more carbon emissions and pushing us further down the path to dangerous climate change.
It’s also important to recognise Westpac’s considerable fall from grace – from being a leader on climate change last decade, they are currently the biggest fossil fuel supporters of all the big banks this year and still haven’t ruled out supporting Adani’s dirty Carmichael mega coal mine proposal.