Who Is Financing Fossil Gas?

From Global Energy Monitor

Global Gas Lending by G20 Governments

"Still Digging," a study by Friends of the Earth US and Oil Change International, covered fossil fuel funding by G20 governments through multi-lateral development banks, development finance institutions, and export credit agencies. The report combined reporting for oil and gas rather than reporting the two separately. Overall, it identified US$58 billion for oil and gas from 2013-2015, and US$53 billion from 2016-2018, compared to US$10 billion and US$11 billion for coal in the same periods.[1]

Japan's Lending for LNG

"Gambling on Gas," a study by Global Energy Monitor, surveyed project-level funding of liquefied natural gas (LNG) infrastructure projects supported internationally by Japanese public monies and private banks. The report found US$18.4 billion in private lending and US$5.0 billion in public lending for LNG terminals, pipelines, and tankers during the period January 2017 to June 2020. Leading Japanese private institutions were MUFG, Mitsui & Co, Mizuo, Nomura, Norinchukin Bank, and SMBC. Public institutions were Japan Bank for International Cooperation (JBIC); Japan Oil, gas and Metals National Corp. (JOGMEC); Development Bank of Japan; and Japan International Cooperation Agency (JICA). The bulk of funding was for LNG terminals (US$16.5 billion), followed by pipelines (US$1.5 billion) and tankers (US$324 million).[2]

Project and Corporate Loans to Australia's LNG Projects 2008-2019

A study by Market Forces identified A$75.23 billion lending by banks and governments to Australian LNG projects.[3] The study reported:

Japanese lenders including JBIC, MUFG, Mizuho and SMBC have loaned a combined $30 billion for 10 LNG projects, accounting for 40% of overall lending. Over half of this ($18 billion) was to finance the Ichthys LNG project, which part-owner INPEX states “is expected to supply approximately 10 percent of Japan’s LNG imports”.
Australia’s big four banks ⁠— ANZ, Commonwealth Bank, NAB and Westpac ⁠— also play a critical role, having provided a combined $12.3 billion (16%) of loans backing 7 LNG projects, including Ichthys LNG, APLNG and Gladstone LNG. ANZ loaned the most of the big four, providing $4.9 billion.
Chinese banks loaned $11 billion (15%) and include China’s ECA the Export-Import Bank of China, China Development Bank, as well as the world’s four largest banks (by total assets); Industrial and Commercial Bank of China (ICBC), China Construction Bank, Agricultural Bank of China and Bank of China.

The study was based on IJGlobal and Refinitiv, along with company-specific research. It included loans but not bonds. The study reported:

Australian gas pipeline company APA Group issued $5 billion of bonds in March 2015 backing its acquisition of the Queensland Curtis LNG (QCLNG) pipeline from BG group. In that case, BNP Paribas, HSBC, NAB and Royal Bank of Scotland (RBS) helped APA sell €1,350 million to investors in the European bond market, as well as £600 million to investors in the UK bond market. Meanwhile, ANZ, JP Morgan, Morgan Stanley and Bank of Nova Scotia helped APA issue US$1.4 billion in the US bond market. Commonwealth Bank, DNB Markets, Mitsubishi UFJ Securities and Westpac also helped issue the European, British and US bonds (acting as ‘Co Managers’).

Gas Power in Australia

A study by Market Forces identified lending by banks and governments to Australian gas-fired power projects in the period 2016-2019.[4] The study listed Bank of China as the main lender, accounting for over AU$1 billion, followed by ANZ, Mitsubishi UFJ Financial Group, BNP Paribas, Bank of America, National Australia Bank, OCBC, Commonwealth Bank of Australia, ING, Citi, ABN Amro, Westpac, Bank of Nova Scotia, BBVA, SunTrust Bank, Societe Generale, Norinchukin Bank, Meiji Yasuda Life Insurance, and Standard Chartered.

Gas Power in the United States, Indonesia, and Hong Kong

Market Forces reported on support for gas power by major Australian banks ANZ, NAB, and CommBank:

Since 2016, ANZ, NAB and CommBank have supported the construction of 13 gas-fired power plants with a combined 12.6 GW of capacity across the United States (10 GW), Indonesia (2 GW) and Hong Kong (550 MW). NAB provided $439m for 6 US-based gas power plants, while CommBank loaned $281m for 5 plants in the US. Meanwhile ANZ loaned $275m for 4 plants in Indonesia and Hong Kong.[5]

Canada

Funders of the Coastal GasLink Pipeline (Canada)[6]

  • JPMorgan Chase - primary banker
  • Bank of Montreal
  • Canadian Imperial Bank of Commerce
  • 17 global banks


Permian Basin

Europe

EU Budget (2014-2020) Regional Development Funding for Fossil Gas Infrastructure

CAN Europe identified total allocations of 940 million euros for fossil gas infrastructure via the European Regional Development Fund and the Cohesion Fund during the 2014-2020 EU budgetary period. Six EU member states have tapped these public funds to support gas infrastructure: Bulgaria (38 million euros), Greece (147 million euros), Lithuania (70 million euros), Latvia (70 million euros), Poland (620 million euros) and Romania (46 million euros).[7]

Private Lenders

Rainforest Action Network et al's "Banking on Climate Change 2020" report identified a total of US$76.3 billion in support of selected LNG companies by 35 financial institutions in the period 2016-2019. The top five financers were Morgan Stanley (US$6.6 billion), JPMorgan Chase (US$6.2 billion), SMBC Group (US$4.8 billion), Mizuho (US$4.8 billion), Citi (US$4.7 billion), Société Générale (US$4.6 billion), Bank of America (US$4.2 billion), UBS (US$3.9 billion), MUFG (US$885 million), and Goldman Sachs (US$1.2 billion). Figures were derived using Bloomberg Terminal's league table function. The scope of the report was financing to 30 companies by attributable capacity in current and planned LNG import or export terminals worldwide, as identified by Bloomberg New Energy Finance in the report "LNG Export and Import Projects," BloombergNEF, 9 May 2019.[8]

Government Lenders

Resources and articles

References

  1. Bronwen Tucker and Kate DeAngelis, "Still Digging: G20 Governments Continue to Finance the Climate Crisis," Friends of the Earth United States and Oil Change International, May 2020
  2. Greig Aitken and Ted Nace, "Gambling on Gas: Risks Grow for Japan's $20 Billion LNG Financing Spree," Global Energy Monitor, July 2020
  3. "Why Banks Must Abandon Australia's LNG Industry," Market Forces, accessed September 2020
  4. "Why Banks Must Abandon Australia's LNG Industry," Market Forces, accessed September 2020
  5. "Funding Climate Failure: How Australia's big banks are undermining the Paris Agreement," Market Forces, accessed September 2020
  6. [Elena Sulakshana, "Who's Banking the Coastal GasLink Pipeline (Update)," The Understory, February 19, 2020
  7. "Funding climate and energy transition in the EU: the untapped potential of regional funds: Assessment of the European Regional Development and Cohesion Funds’ investments in energy infrastructure 2014-2020," Climate Action Network Europe, April 2020
  8. "Banking on Climate Change 2020," Rainforest Action Network et al., March 2020