(A lockdown protest in Wells Fargo’s headquarters in April 2022. Photo by Peg Hunter on Flickr. Advocacy campaigns targeting banks have been a focus of Bill McKibben’s Third Act group of “experienced Americans”)
In the mid-teens, the sketch show Portlandia skewered, in mostly a loving way, the high-minded liberal denizens of Portland, Oregon.
My own Portlandia moments are almost always when I go to run errands in Takoma Park, Maryland, which frankly predates Portland’s rep as a crunchy, weird hippies-with-money enclave by decades.
Takoma Park did not disappoint a few weeks back when I was standing in line at the zero-waste store. A woman working at the counter was frustrated about her point of sale system, which quickly morphed into anxiety about her business checking account. “We use Bank of America … I know we shouldn’t, it’s awful,” she said out loud, unclear if to me, the other woman in the store or just the universe in general.
Here was a woman running an eco-minded business berating herself for using one of America’s largest, and therefore most convenient, banks
“Excuse me,” I said, “you’re literally saying this inside the zero-waste store you’re running, right now, by yourself.” The implication being: Give yourself a break. She shrugged and nodded in appreciation. “I guess that’s a good point.” But I don’t think I quelled her worry.
I didn’t tell her that earlier that day I had emailed Bank of America to ask them why they were still financing fossil fuel exports in the US.
My most recent Guardian story took a look at how large banks - in the US and elsewhere — are involved in lending and other financial services to companies developing fossil fuel export terminals along the US Gulf Coast.
Let me back up to explain why this story and why banks.
I’ve been working with the folks at Floodlight for several months on a variety of projects — including stories about how fossil fuel companies make and spend money. There’s a lot to cover there, but when it comes to projects within the US, LNG terminals are where billions of dollars are going.
LNG stands for “liquefied natural gas”. When “natural” gas (mostly methane) is produced from deposits in places like Pennsylvania, Texas and Louisiana, most of it is burned domestically, in power plants and for heating and cooking in homes and businesses. But some is exported, including across the oceans in giant specialized cargo ships. But not as a gas — the LNG terminal turns that gas into a liquid, allowing for easier ship transport.
LNG export is relatively new phenomenon in the US - it didn’t take off in a big way until 2016, but now the US is regularly one of, if not the biggest exporter, of LNG in the world.
The LNG terminal boom — mostly on the coast of Texas and Louisiana — has kept growing, really only pausing during the beginning part of the pandemic as the price of oil and gas became even more volatile.
The money to be made on LNG export is still attractive enough to support a new round of potential projects already approved by federal regulators, just waiting to break ground. There’s almost a dozen of these of various sizes in this holding pattern, many of them along the same stretch of coastal Texas and Louisiana.
What are they waiting for? Money. These are expensive projects and they take several years to build. A recently greenlit project in Texas will cost more than $13 billion and is expected to be finished in 2027. With one exception that literally involves ExxonMobil and a Middle Eastern country, these funds are not coming out directly out of the businesses developing these terminals. They are taking out loans and adding new investors to raise cash.
In the story I used data complied by the Sierra Club and the banks’ own climate policies to understand which banks were frequent fliers when it came to financing these projects and what their policies, some of which already exclude investing in other fossil fuel projects, have to say about LNG.
You’d be hard pressed to name a major bank that wasn’t somewhat involved in America’s LNG boom, but a few banks stood out.
The top funders are Japan’s three megabanks, for a total of almost $30 billion combined. Japan is one of the world’s biggest LNG importers and their financial institutions are involved in similar projects around the world. America’s largest banks are represented, but some more than others. It sounds silly, at less than $2 billion each, Citi & Wells Fargo’s total lending to LNG is relatively smaller than other banks, especially of their size. (Both are among the world’s biggest funders of fossil fuel projects overall).
Of course, this is all just one part of the financing pie. A coalition of advocacy and research groups have added up the total numbers across all kinds of fossil fuel expansion projects: it’s roughly $5.5 trillion in lending and underwriting since the Paris Accords in 2016.
But I focused on LNG because they are among the largest financing projects in the US and because of the ongoing argument being made at the highest levels of industry and government that gas export is a net positive for the climate, compared to the dirtiest fuels.
Gas is indeed less directly emitting than coal, but its pollution profile is nowhere near as low as most renewables and spotty monitoring of methane leaks along the whole supply chain means estimates about how much warming pollution is being added are just that, estimates.
I spent a significant amount of time trying to pin down the range of estimates about how polluting LNG is compared to coal, from industry, academic and advocacy sources. It was very wide and some cases, believable increases in the methane leakage rate would make it worse than coal.
One thing I didn’t get into in this story is what banks could be doing with that money instead. What about zero-emission projects and other actually clean energy investments?
A recent analysis by Bloomberg NEF added up banks’ lending to both fossil fuel projects and zero-emissions energy and other climate investments. Some banks had higher ratios than others, but on average, for every $1 a bank was financing to fossil fuel projects, it was financing $0.80 to “green” projects.
Almost on par, sure, but nowhere near the ratio needed to make a worldwide transition off fossil fuels at the speed required. Bloomberg estimated that figure at $4 in zero-emissions energy for every $1 in fossil fuels. There’s other giant pools of investment money not in banks I haven’t even touched on here, but banks are fairly representative of the state of energy investment right now.
I still don’t think the Takoma Park zero-waste store lady needs to drop Bank of America. There aren’t a lot of strong climate stances in banking, even among smaller banks. Those that do tend to be French, or not actually involved in lending billions of dollars in the first place.
But almost all of these banks have climate commitments, including targets for cutting the emissions they finance by 2030 and 2050. That wasn’t true just a few years ago. Activism on in this area has ranged from boycotting to shareholder resolutions to people literally locking themselves to the Wells Fargo coach in downtown San Francisco.
Banks are not totally unresponsive to calls to change what they invest in — but the pressure is coming from all angles, and the pace of movement is slow. Stories like mine seek to see how those commitments are or aren’t actually driving change.