By RANVIR S. NAYAR
A report published last week by a coalition of several international climate action groups revealed that the world’s 60 largest banks provided a record $3.8 trillion in financing for fossil fuel companies’ “dirty energy” projects in the five years following the 2015 Paris Agreement on climate change.
The Paris Agreement has repeatedly been hailed as a milestone in the battle to slow down global warming and take preventive and curative actions to help fight climate change, slow the rise in global average temperatures and mitigate the severe impact of climate change on various parts of the world in the shape of flash floods, tornadoes, forest fires and droughts, besides record ice melts on the poles.
One of the biggest “achievements” of the Paris meeting and the subsequent agreement, which has been hailed ever since, was the large presence of corporations from across the world that have a big role to play in the global battle to save the planet. At the meeting, though the key agreement was between governments representing the 200-odd nations that are members of the UN, the presence of hundreds of the biggest companies from various sectors of the global economy was presented as a very positive sign and an indication of the commitment of businesses to adopt green economy principles in order to make climate action a reality.
Numerous pledges were made by a whole host of companies, but most importantly the dirtiest of the industries — mining, fossil fuel exploration and production firms, and numerous utilities. Most of the big oil firms, ranging from giants like BP, Shell, Total, Engie, Exxon and Chevron, as well as regional champions from Asia and the Middle East, promised a rapid transition to green energy and a sharp reduction in their carbon footprint.
Similarly, the meeting was also attended by a who’s who of the bankers’ universe, as finance had been and remains one of the biggest issues of debate between rich and developing countries. This is because developing countries need finance to access alternative technologies that can cut carbon emissions, as well as to mitigate the impact of climate change on the most vulnerable countries, notably the Pacific islands and small islands everywhere.
Years before the Paris meet, in 2012, developed nations pledged $100 billion a year to developing countries. However, none of the donor countries are anywhere close to meeting their target for annual contributions. According to the Organization for Economic Co-operation and Development, the funding fell far short of that target until 2018, the latest year for which complete data is available. Moreover, even with this reduced amount of climate finance made available by the rich nations, an overwhelming chunk has been in the form of loans and not grants as was expected.
The expansion plans of fossil fuel companies need to be abandoned immediately.
Even while the developing world has faced a severe shortage of funds with which to carry out its transition to a green economy, it seems that the large enterprises in the fossil fuels business have not faced any such financial crunch, right from the time the Paris meeting ended. And it seems as though, when they exited the meeting halls in Paris, the leaders of big firms and their bankers forgot their pledges and went back to their business-as-usual practices. That’s the reason the new report reveals that banks across the world have been pumping record funds into fossil fuel companies.
Of the 60 banks analyzed by the nongovernmental organizations behind last week’s report, American and Canadian banks accounted for nearly 50 percent of the total global finance for the industry. American heavyweight JPMorgan Chase provided more finance than any other bank in the world, while the British bank Barclays provided the most fossil fuel financing among all European banks and French bank BNP Paribas was the biggest contributor in the EU.
The financing of fossil fuels consistently rose each year from 2016 to 2019 and even the pandemic of 2020, which drove down the production and consumption of fossil fuels by record levels, was not enough to crush the financing. Thus, even amid the coronavirus crisis, financing for the 100 biggest expansion plans for fossil fuels grew by 10 percent last year.
As global warming has continued to advance rapidly, pushing the planet toward certain disaster, it is imperative that governments across the world take urgent action on two counts. One is to cut their carbon emissions by much more than their commitments made in Paris, which practically none of the 200-odd countries are even close to meeting. The second step is to ensure that future emissions are nipped in the bud, which means that it is imperative for countries to dramatically reduce their dependence on fossil fuels. This means that the expansion plans of oil, gas and coal companies need to be abandoned immediately. –AN