Banks and fossil fuels: They are breaking the first law of holes

A new report released today from the Stockholm Environment Institute has more stark evidence we need to be shifting away from fossil fuels at a rapid clip.

It highlights how, if we accept that keeping global warming to less than 1.5ºC above pre-industrial levels is a good idea, then our carbon budget is set to run out in about six years. Even stretching that limit out to representing a 66% chance of staying below 2ºC and the carbon budget will run out in less than 20 years.

That doesn’t afford enough space to sustain all the coal, oil and gas projects currently operating let along new projects that would just add to the unburnable carbon embedded through our economy. The first rule of holes is ‘if you find yourself stuck in a hole, stop digging’. Literally and metaphorically, we urgently need to stop digging more holes.

But since late 2015, when the big four banks committed to support the 2ºC global warming limit, they have contributed to deals for new fossil fuel projects capable of adding a massive three billion tonnes of CO₂ to the atmosphere.

That’s the equivalent of over five years of Australia’s emissions right there, in a handful of new projects.

The table below shows the new fossil fuel projects that major Australian banks have provided credit to since they committed late last year to support the 2ºC global warming limit.

While some of these projects are examples of adding to the global capital stock of carbon reserves and others would facilitate the burning of carbon reserves, all of them act to expand an industry that urgently needs to contract in order to fit within a carbon budget we are currently on track to exhaust within six years.

Given the findings of the Stockholm Institute Report, it is hard to escape the reality that even the smaller projects on this list are inconsistent with action to limit global warming to below two degrees.

But there is a clear difference in the scale of projects listed and their contribution to increasing carbon emissions.

This quote from Lundin Petroleum with regard to their Johan Sverdrup discovery speaks for itself: [the project] ‘is one of the largest oil discoveries ever made on the Norwegian continental shelf and will prolong the life of the Norwegian oil industry for several decades.’

And development of Lundin’s 22.6% interest in the Johan Sverdrup oil field was financed, of course, by none other than ANZ and Commonwealth Bank.

The largest project of all, the Commonwealth Bank funded Sabine Pass LNG terminal in Louisiana, is on another scale entirely.

With its full planned capacity of 27 million tonnes per year, it is larger than the three LNG terminals built on Curtis Island in Queensland combined.

Australia’s banks are, it seems, as impervious to empirical evidence as certain Senators. We hope that their customers and shareholders do a better job of talking sense to them because if the banks can help ‘liberate’ as much CO2 through a handful of deals as the Australian economy can manage over six years, it’s going to be customers, shareholders and the broader community that are needed to bring the banks into line.

Julien Vincent is Executive Director of Market Forces