Financing Priorities Put Pressure on Oil and Gas Projects
Home > Oil & Gas > Article

Financing Priorities Put Pressure on Oil and Gas Projects

Photo by:   Olivier_Le_Moal
Share it!
Perla Velasco By Perla Velasco | Journalist & Industry Analyst - Tue, 05/23/2023 - 16:19

BNP Paribas announced that it will discontinue direct financing for new oil and gas projects, reinforcing its commitment to sustainable finance. This move makes BNP Paribas the second-largest global bank to take such a step, following in the footsteps of HSBC, which made a similar commitment in December 2022.

The decision by BNP Paribas follows the mounting pressure from environmental advocates and concerned stakeholders. In January 2023, the bank released new energy financing policies, outlining its ambitious goals to reduce financing for oil extraction and production by more than 80% and for gas extraction and production by over 30% by 2030. BNP Paribas aims to transition 80% of its energy financing activities toward the production of low-carbon energies. However, these policies faced scrutiny and calls for more substantial action.

In response to the criticism and demands for stronger commitments, BNP Paribas unveiled its updated 2023 Climate Report. This report includes a firm commitment to no longer provide any financing dedicated to the development of new oil and gas projects, regardless of the financing methods employed. The bank's decision demonstrates a recognition of the need to accelerate the transition to cleaner and more sustainable energy sources.

The revised climate report also encompasses a series of interim decarbonization targets for carbon-intensive sectors to be achieved by 2030. BNP Paribas is taking proactive steps to align its financing activities with the global imperative to combat climate change and reduce carbon emissions.

While BNP Paribas and HSBC have taken significant strides towards sustainable finance, other major banks in Europe remain in the spotlight as top financiers of oil and gas expansion. Société Générale, Crédit Agricole, Barclays and Deutsche Bank are now facing increased scrutiny for their continued support for oil and gas projects. 

In 2022 alone, BNP Paribas extended US$20.8 billion in loans to support oil and gas-related projects. This information, sourced from the Rainforest Action Network (RAN), the Sierra Club and Oil Change International (OCI), sheds light on the previous substantial financial involvement of BNP Paribas in the oil and gas sector. Notably, from 2016 to 2022, the bank allocated US$42.13 billion toward offshore projects, solidifying its position as one of the prominent providers of financing for oil and gas ventures.

BNP Paribas and HSBC’s decision reflects a growing global trend among financial institutions to address the environmental risks associated with fossil fuel investments. The transition to renewable energy sources and the reduction of greenhouse gas emissions are vital components of a sustainable and resilient global economy.

As reported by Upstream, the increasing global energy demand may drive a continued flow of financing toward oil and gas projects. However, with Western banks actively phasing out their financing of fossil fuels, oil and gas companies could potentially seek support from Asian financing markets.

Photo by:   Olivier_Le_Moal

You May Like

Most popular

Newsletter