Finance is leaving oil and gas

Globally significant financial institutions with assets under management (AUM) or loans outstanding larger than US$10 billion are restricting fossil fuel lending to oil, LNG, gas, oil sands and arctic drilling. 

Many have also committed to reducing their fossil fuel exposure to align with the Paris Agreement’s emissions reduction target of 1.5 – 2.0° celsius.

See other divestment efforts:

• Asset managers leaving coal
• Banks and insurers leaving coal

Why are financial institutions restricting oil and gas funding?

Significant investors are divesting from oil sands exploration, production, transport and processing, and also arctic oil and gas projects over concerns about carbon emissions.

These investors are increasingly aligning their portfolios with the emission reduction goals of the Paris Agreement.

Oil sands (sometimes known as tar sands) consist of heavy crude oil mixed with sand, clay and bitumen, and is used to produce gasoline, diesel, jet fuel and other petroleum-based products.

To extract oil, oil/gas companies burn the fossil fuel ‘natural’ gas to generate enough heat and steam to melt the oil out of the sand. Some five barrels of water are needed to produce a single barrel of oil.

Oil sands extraction is among the world’s most carbon intensive large-scale crude oil operations. Carbon emissions are reported to be 31% higher than from conventional oil. The release of methane (from gas) during the oil extraction process generates upstream greenhouse gas emissions, which are worse for the climate than coal in the short term.

Arctic drilling to extract ‘natural’ gas and oil is more costly and technologically complicated than drilling for oil on land. Large amounts of water are consumed in the process. And the ability to respond to oil spills is severely limited.

Banks, insurers and asset managers are reducing or eliminating their support for fossil fuel projects.

Note

* Significant financial institutions are restricted from this tally if they have AUM<US$10billion, and/or the institution’s announcement has not been followed up with public disclosure, and/or the restrictions are selectively limited. Asset managers/owners are included only if AuM >US$50bn.

Insurance companies divest fossil fuel investments across their asset portfolio and restrict the provision of insurance, while banks restrict lending and underwriting to fossil fuel companies or projects.

IEEFA will continue to monitor announcements and will add or delete institutions pending implementation of said announcements.