UK bank Barclays will no longer provide project finance, or other direct finance, for its energy clients for upstream oil and gas expansion. This includes infrastructure for such projects, and applies from today, Barclays said.
The bank will, also from today, no longer provide financing to new energy clients, if more than 10pc of their planned oil and gas capital expenditure (capex) is in expansion. And it would only renew existing or provide new financing for "non-diversified" energy groups that plan to spend more than 10pc of oil and gas capex on long-lead expansion "by exception", from the beginning of 2025.
Energy groups must have in place, by the beginning of 2026, "net zero-aligned near-term scope 1 and 2 emissions reduction targets", a target to cut methane emissions and a commitment to end routine venting and flaring by 2030, or Barclays will not provide finance. The bank has set a deadline of 1 January 2025 for energy companies to have a transition plan in place.
The bank will, from today, not provide direct finance for oil and gas projects in the Amazon or the Arctic Circle, or for European hydraulic fracturing (fracking). Barclays in February 2023 tightened its policy on funding coal and oil sands.
It today set out criteria for "transition finance transactions", which it will use towards its target to facilitate $1 trillion of "sustainable and transition finance" between 2023-30. It has defined transition finance as any that supports greenhouse gas (GHG) emissions reductions towards a 1.5°C pathway in "high-emitting and hard-to-abate sectors". The Paris climate agreement seeks to limit global warming to "well below" 2°C above pre-industrial levels, and preferably to 1.5°C.
Other banks, including HSBC, BNP Paribas and Societe Generale have pledged to stop or limit new oil and gas financing. Dutch fund PFZW this week divested from 310 fossil energy firms.
Barclays engaged with investors and non-governmental organisation (NGO) ShareAction, the NGO said. ShareAction welcomed the bank's policy update and "some positive commitments", but said it could have gone further.
"Barclays is wrong not to have ruled out financing companies that focus exclusively on fossil fuel extraction," ShareAction campaign manager Kelly Shields said.
The bank's new policy is an improvement, but "needs to be the first step on a much longer journey", said NGO ActionAid's global lead on climate justice Teresa Anderson.
