Defunded: Financing for Oil and Gas from Big U.S. Banks Has Plunged

John CarneyMarch 31, 2022

Financing of the oil and gas industry by the biggest banks in the U.S. was far below prepandemic levels in 2021, according to data from a group of climate change activist organizations.

The four largest U.S. banks—J.P. Morgan Chase, Citigroup, Wells Fargo, and Bank of America—provided the oil and gas sector with $181.2 billion of financing in 2021. That is 14.3 percent below the 2019 level, according to data in the 13th annual “Banking on Climate Chaos” study.

Those four banks together account for one-quarter of all fossil fuel financing, according to the report.

Soaring oil prices due to insufficient supplies have pushed gasoline prices to record highs recently, causing frustration for U.S. consumers and fueling inflation. On Thursday, President Joe Biden said the U.S. would release one million barrels a day from government stockpiles in an effort to lower the price.

The report calls for banks to “prohibit all financing for all fossil fuel expansion projects and for all companies expanding fossil fuel extraction and infrastructure along the whole value chain.” It also calls for banks to begin eliminating all financing for fossil fuel extraction.

That is a stark contrast with Biden’s new stance. On Thursday, Biden pleaded with oil companies to expand production and said he would ask Congress for the power to fine companies that hold energy leases on federal lands that go unused.

Biden’s proposal on Thursday is a policy u-turn. On the campaign trail, Biden promised to ban new leases and he has attempted to put hardcore climate change activists into key financial regulatory positions. Those attempts have faltered when Democratic Senators rejected the nominations.

Financial institutions have nonetheless faced pressure from lawmakers and regulators to reduce or eliminate altogether financing for fossil fuels.

“Our planet is staring down a point of no return, and the world’s largest financial institutions are pouring gasoline on the fire. The science is unequivocal: the only way to limit global temperature rise to 1.5C by 2050 is by immediately halting all financing of new fossil fuel extraction projects,”said Congresswoman Rashida Tlaib (D-MI), according to Marketwatch.

The report was published by Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, Sierra Club, and Urgewald. It was endorsed by over 500 organizations from more than 50 countries.

Several of the top American banks—including J.P. Morgan Chase, Citi, Bank of America, Morgan Stanley, and Goldman Sachs—have committed to net-zero ommissions by 2050.