French bank BNP Paribas has made a commitment to reduce lending to the oil and gas industry by 80 percent by 2030 as part of entering a new phase in its decarbonization efforts.
In a press release, the bank reported it had already stopped lending to new oil projects in 2016 and planned to reduce current funding for oil production by 25 percent by next year. It would also exit coal, with the process to be finalized by 2030.
BNP Paribas also noted its outstanding loans for low-carbon energy projects were about 20 percent higher than its exposure to fossil fuels, having topped 28 billion euros last September.
The French bank's announcement is the latest in a string of similar announcements from large lenders as they rush to declare their commitment to the energy transition by vowing an end to financing oil, gas, and coal production.
There is virtually no large international bank left in the world that has not made such a commitment, and yet Reuters reported earlier this week that up until now, at least, there has been little substance behind these declarations.
The amount of money banks are putting into renewable energy has changed little over the past six years, Reuters reported Tuesday, citing a report commissioned by several environmentalist nonprofits, including the Sierra Club and Fair Finance International.
Bank loans and bond underwriting for renewable energy businesses since 2016 has averaged 7 percent of a total $2.5 trillion in loans and bond underwritings for the energy industry as a whole, the report found
The reason for this was that although the amount of money being poured into renewables increased over the period, so did the amount of money going into fossil fuels.
"Banks' financing to fossil fuels should be phasing out as financing to renewables increases drastically to have any chance of reaching the world's - and their own - climate goals," according to Ward Warmerdam, a researcher with Profundo-the entity that authored the report.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More