9 November 2021
NAB’s updated oil and gas policy, released today, is a greenwashing exercise that allows it to continue funding expansion of the fossil fuel industry.
The new policy (p.43) contains a number of new commitments (emphasis added):
- A cap on oil and gas exposure of US$2.4 billion, reducing from 2026 through to 2050.
- “Only consider directly financing greenfield gas extraction in Australia where it plays a role in underpinning national energy security.”
- “Not directly finance greenfield gas extraction projects outside Australia.”
- “Will continue to support integrated liquefied natural gas (LNG) in Australia, New Zealand, Papua New Guinea and selected LNG infrastructure in other other regions, with such exposures to be included within the oil and gas exposure cap.”
- “Not directly finance greenfield oil extraction projects or onboard new customers with a predominant focus on oil extraction.”
- “Not directly finance ultra-deep water oil and gas extraction projects.”
The new policy contains so many allowances and loopholes that it’s unclear how it will materially impact the bank’s lending for new fossil fuel developments moving forward.
For instance, the policy only applies to ‘direct’ finance (often referred to as ‘project finance’), whereby banks fund a project as opposed to its owners. However, much of NAB’s fossil fuel lending takes the form of corporate finance, such as loans to major gas operators such as Santos for general purposes, which can then be used for new gas and oil projects. Today’s announcement continues to allow this practise.
The policy also allows the bank to fund greenfield gas extraction in Australia under the loosely defined guise of ‘national energy security’, and to continue funding huge new LNG developments without restriction. The bank’s current role in arranging debt for Global Infrastructure Partners’ prospective US$3.5 billion investment in Woodside’s Pluto LNG Train 2 exemplifies the new policy’s weakness.
According to data from Market Forces, of the expansionary fossil fuel projects funded by NAB since 2016, those with the largest emissions impact are North American-based LNG projects (e.g. Corpus Christi and Sabine Pass) and pipelines (e.g. Midship Pipeline, Coastal Gaslink Pipeline) and Australian gas fields connected to LNG projects (e.g. Barossa Gas Project which would supply Darwin LNG), all of which would still be permissible under the new policy.
NAB’s commitment to cap oil and gas exposure at US$2.4 billion until 2025 appears only to cover extraction activity, as opposed to midstream and downstream activity (e.g. oil and gas transport, refining and retail), given this is the only exposure it currently reports. By contrast, its major competitors all report exposure to the oil and gas ‘value chain’, including LNG, refining and retail.
“NAB’s policy is a cynical attempt to wordsmith its way out of the climate crisis,” said Jack Bertolus, Australian Campaigns Coordinator, Market Forces
“The IEA provides clear red lines to clarify fossil fuel developments no longer permissible if we are to achieve the goal of net-zero emissions by 2050. NAB’s policy twists and blurs those lines, allowing it to continue funding business-as-usual fossil fuel expansion.”
“The bank isn’t serious about net zero by 2050 and should either take genuine action or publicly withdraw its commitment to the goal.”
- In October, Market Forces supported shareholders to lodge a resolution with banks including NAB, calling for an end to the billions of dollars of finance which continue to be poured into companies and projects expanding the fossil fuel industry.
- In October, The Chaser (in collaboration with Market Forces) rebranded NAB to ‘NOB’ owing to the bank’s substantial fossil fuel lending.
- In August, former NAB Chief Economist Rob Henderson said “It’s high time that banks like NAB decided not to lend any more to new projects in fossil fuels”.
- In October, French bank La Banque Postale committed to immediately suspend financial services to companies contributing to oil and gas expansion, and set a 2030 deadline to totally exit oil and gas. In the same month, Belgian bank KBC made a similar announcement.
- In September, NAB participated in a A$600 million loan for major oil and gas producer Beach Energy, which plans to almost double its FY21 production by FY24, including new projects in the Otway and Perth basins.
- In November 2020, NAB loaned US$50 million to Santos for its acquisition of a 37.5% interest in the huge Barossa gas field proposal in Oct 2020, which Santos sanctioned in March 2021 and has been labelled “a CO2 emissions factory with an LNG by-product”.