Groundbreaking banking bans – driven by record temperatures and devastating disasters – need to be adopted across the banking industry and fossil fuel supply chains, writes Will van de Pol.
Clean energy finance advocacy organisation, Market Forces CEO, Will van de Pol offered some sage advice for Australian banks recently:
'Banks must bring in 2025 with a big bang for the climate'
What’s your New Year’s resolution?
The Commonwealth Bank (CommBank) has made a groundbreaking resolution to stop funding coal, oil and gas companies without genuine plans aligned with global climate goals.
Make no mistake, decisions like this from big banks are exactly what's required to reduce risk from bushfires, floods and cyclones, fuelled by coal, oil and gas emissions.
The bank’s policy to this effect comes into force this week. But it’s hardly a happy new year for Australia’s biggest oil and gas companies like Santos and Woodside, which can no longer borrow money from Australia’s biggest bank to develop new gas fields, incompatible with internationally agreed global warming goals.
Suppose these fossil fuel companies want to pursue their gas expansion plans. In that case, they’ll have to do it without the backing of not only CommBank but a growing list of major international banks, which are closing their doors to fossil fuel producers undermining the transition to clean energy. It’s high time our other big banks, ANZ, NAB and Westpac follow suit.
We must face the facts, for the seventh year in a row, renewable energy including solar and wind power comes at the lowest cost of any new electricity generation, according to the CSIRO’s recent GenCost Report with the Australian Energy Market Operator, (AEMO).
These costs factor in the whole kit and caboodle: power generation, storage, and transmission poles and wires.
Unlike me, starting the year with an empty promise to run a marathon, CommBank has been hitting the training track for a while, delivering some results in the race to net zero and leaving Australia’s other big banks in the dust.
Last August, CommBank revealed it had started refusing finance to fossil fuel clients without credible transition plans aligned with the climate goals set out in the landmark 2015 Paris Agreement.
Better late than never, especially when CommBank only recently held the dubious honour of being the country’s biggest funder of fossil fuels, pouring $15.5 billion into coal, oil and gas between 2016 to 2021.
This is a monumental shift. Just like last month’s Christmas lunch — the proof is in the pudding.
CommBank’s improving climate policy has turned into concrete action, seeing the bank’s lending to oil and gas producers halve in the past two financial years, cutting $700 million of exposure to the sector in 2023 alone.
But let’s not get carried away. The Commonwealth Bank’s approach to fossil fuel funding is still far from perfect.
Market Forces’ research shows there are plenty of banks in Australia and beyond our shores that have already confirmed they would not – under any circumstances –lend a cent to the expansion of the coal, oil, and gas industries, which are driving dangerous climate change.
CommBank took part in a November 2023 $1.25 billion loan to Australia’s largest gas pipeline company APA without a commitment to assess some key fossil fuel sub-sectors for alignment with climate goals.
Having signed preliminary agreements with US-headquartered wannabe gas frackers Empire Energy and Tamboran Energy, APA has plans to build pipelines that would light the fuse on what scientists are calling a carbon bomb in the Beetaloo gas basin.
Emissions from just one of the Beetaloo gas mining companies, Tamboran, could reach up to 2.3 billion tonnes of carbon dioxide equivalent over 25 years, according to research from Climate Analytics.
For perspective, that’s equivalent to the emissions caused by driving more than 447 million petrol-fuelled cars for a year.
The multi-million dollar question for CommBank is: Why on earth would you fund the company building the pipeline if you wouldn’t fund the company at the end of it?
Inconsistencies aside, the contrast between Australia’s biggest bank and its peers remains stark. There’s no better example of this than an August 2024 deal that saw ANZ, NAB and Westpac join international banks in extending the lifetime of a loan to Santos into the next decade.
These banks also saw fit to increase the total loan to a whopping $1.24 billion. And we must remember Santos, Woodside and other big gas producers send around 80 per cent of Australia’s gas overseas as liquefied natural gas (LNG), mostly royalty-free.
Our big banks are backing multinational companies to give away Australia’s gas for peanuts.
As we ring in 2025 and enter the back half of what has been dubbed the ‘critical decade’ for climate action, the need for ANZ, NAB and Westpac to match and improve on CommBank’s New Year’s resolution has never been more pressing.
Devastating disasters fuelled by year upon year of record-breaking temperatures are becoming all too familiar.
The big banks must put their money where their mouth is or face being held responsible for the human, environmental, and economic toll of the bushfires, floods and heatwaves being supercharged by new coal, oil and gas developments. Projects that companies with the financial backing of ANZ, NAB and Westpac are developing.
Will van de Pol is the CEO of Market Forces and is driven by his desire to play an active role in the fight for climate justice.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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