Banks' fossil fuel financing hit $673bn in 2022: Study

Fossil fuel financing from the world's 60 largest banks decreased to $673bn in 2022, from $742bn in 2021, as higher profits for oil and gas companies led to reduced borrowing, according to non-governmental organisations. But financing for the largest LNG firms increased to $22.7bn from $15.2bn in response to energy security concerns.

The 14th annual Banking on Climate Chaos report released today by non-governmental and civil society organisations Rainforest Action Network and Oil Change International, endorsed by 625 organisations, looked at world's 60 largest commercial and investment bank by assets according to rating agency Standard & Poor's (S&P). It found that, for the first time, banks' fossil fuel funding in 2022 was lower than it was in 2016, but it warned this was not the result of more ambitious policies.

"There is little to instill confidence that this shift will become a positive, long-term trend, because fossil fuel profits, not bank policies, were the most notable headline for 2022," the report said. It said "several big players" in the oil and gas sector did not borrow in 2022.

"Since most bank policies do not exclude financing for fossil fuel companies, there is no reason to think that 2022 is anything but a temporary outlier in the trajectory of fossil fuel finance," the report said.

It found that banks' financing of LNG projects in 2022 increased by almost 50pc on the year, on the back of energy security concerns sparked by Russia's war on Ukraine. Japan's Misuho was the top financier of LNG projects in 2022, with LNG US project developer Venture Global and Japanese power utility Jera as its main clients.

"Developers dusted off dozens of proposals for export terminals in North America, Qatar, Africa and Australia," the report said, adding that they also "pushed forward import terminals in Europe and Asia, even as current events laid bare the risks of depending on a volatile global market for fossil gas imports".

The report found that fossil fuel financing remains dominated by a "handful of banks" based in the US, Canada and Japan. Canadian bank Royal Bank of Canada has become the world's largest fossil fuel industry funder in 2022 with $42.1bn, although JP Morgan Chase remains at the top of the list for the 2016-22 period with $434.1bn.

French bank BNP topped its European peers for fossil fuels financing in 2022 with $20.8bn. In Asia-Pacific, Mitsubishi UFJ Financial Group (MUFG) is the largest funder of the industry with $29.5bn.

"Canadian, Japanese and French banks all increased their share of total financing from 2021 to 2022," the report said. US banks provided 28pc of the total financing in 2022, slightly less than the 33pc they provided in 2021, according to the NGOs.

By Caroline Varin