2 August 2022
Last week, Westpac announced it was joining the Net-Zero Banking Alliance and made some further climate change commitments that still fail to demonstrably align with the Paris Agreement’s goals.
As Westpac made the announcement, another part of the bank was reportedly in talks with Santos, a company planning to open up several new oil and gas projects such as the Barossa gas field off the Northern Territory coast and the Narrabri Coal Seam Gas project in Northern New South Wales.
This hypocrisy has the potential to undermine not just Westpac’s climate change commitments and the Net-Zero Banking Alliance but, more importantly, our chances of keeping global warming under control.
Funding climate wreckers
Westpac has form when it comes to financing companies with business strategies consistent with the failure of the Paris Agreement, and the bank’s latest commitments fail to rule out more of these dodgy deals. Last month Westpac participated in a refinancing of Woodside, which is planning several massive new LNG expansion projects such as Scarborough off the coast of Western Australia and Sangomar off the Senegalese coast. Woodside also bought BHP’s petroleum business earlier this year, adding several other expansionary oil and gas projects to its books.
Westpac is also a current lender to Whitehaven Coal, which is planning to spend $2 billion on expansionary coal mining projects such as Vickery, Winchester South and Narrabri Stage 3.
Westpac is able to continue financing companies expanding the scale of the fossil fuel industry because its commitments only apply to project finance (lending directly to the project or piece of fossil fuel infrastructure itself). So while Westpac can claim to be reducing its financed emissions in the coal, oil and gas sectors by shrinking its exposure to these projects, it is continuing to finance the companies that own – and are trying to build more of – these polluting fossil fuel projects.
New climate change commitments don’t stack up
The commitments Westpac made last week also fall short of what a bank committed to the Paris Agreement and net-zero emissions by 2050 would produce.
- Westpac’s target to reduce the emissions intensity of its power generation customers to 0.10tCO2e/MWh (tonnes of carbon dioxide equivalent per megawatt-hour) by 2030 seems aligned with the IEA’s Sustainable Development Scenario, which wouldn’t see emissions reach net-zero until 2070.
- The bank’s commitment to reduce upstream oil and gas project finance emissions by 23% by 2030 falls short of the emission reductions in the International Energy Agency’s Net Zero by 2050 scenario (NZE), which requires combined oil and gas emissions to fall by 28% from 2019-2030. The Production Gap Report (Chapter 2 data) also finds that combined oil and gas production must fall 30% from 2020 to 2030 to be consistent with a 1.5ºC global warming limit.
- Westpac says it will only consider directly financing new greenfield oil and gas projects that are in accordance with the NZE, even though this scenario explicitly rules out new oil and gas field developments. The policy offers a loophole for projects where the Australian or New Zealand Government or regulators determine that supply from the asset is necessary for national energy security. This means Westpac’s apparent climate change commitment can effectively be overruled at any time by the government of the day.
- Westpac’s expectation that customers will have developed credible transition plans by 2025 gives clients like Whitehaven Coal, Woodside and Santos three more years to open up new coal, oil and gas projects that are incompatible with the Paris Agreement and could operate for decades.
Above all else, if Westpac can make these commitments to act on climate change but continue to finance companies with business strategies that align with the complete failure of the Paris Agreement, often pushing us to 3ºC, 4ºC or more, then any alliances, pledges or commitments the bank makes will ring hollow.
Tell Westpac: net-zero by 2050 and the Paris Agreement means no further finance for Santos!