SINGAPORE - A dozen major fossil fuel projects being planned for could lock in huge amounts of greenhouse gases if completed and likely doom the Paris Climate Agreement goal of limiting warming to 1.5 deg C, a report released on Thursday (Dec 10) says.
The Five Lost Years report by 15 non-governmental organisations says major financial institutions have provided US$1.6 trillion ($2.14 trillion) in loans and underwriting since January 2016 and invested US$1.1 trillion in bonds and shares in the 133 companies driving the 12 projects.
This totals US$2.7 trillion in fossil fuel funding since the Paris Agreement was sealed in December 2015.
This huge level of funding defies the aims of the Paris accord and is at odds with the global shift towards cleaner energy and transport and carbon curbs pledged by financial firms, say the authors, which include Urgewald, a German non-profit environmental and human rights organisation, and Profundo, a Dutch sustainability research non-profit.
The projects include a fleet of new coal power plants in China, the Philippines and Bangladesh; a major expansion of gas production in Western Australia; oil and gas projects and pipeline construction in the East Mediterranean; offshore drilling in Britain and Norway; and a vast plan to extract oil and gas in Argentina's Vaca Muerta region.
Restricting global warming to 1.5 deg C requires limiting the total amount of carbon dioxide (CO2) emissions between now and the end of the century.
If humanity keeps on polluting at today's rate, it will bust the budget and the 1.5 deg C target. So deep cuts are needed.
The authors say the 12 projects would release an estimated 175 billion tonnes of additional CO2 emissions over their lifetime, should they be allowed to proceed as intended. This would threaten the carbon budget and 1.5 deg C target.
In total, these projects could add the equivalent of roughly five times the total global fossil fuel CO2 emissions recorded last year, which was 36.4 billion tonnes.
"Banks and investors cannot credibly say that they are committed to aligning with Paris while simultaneously funding projects like those outlined in this report," said co-author Mr Patrick McCully of the Rainforest Action Network.
Under the Paris Agreement, nearly 200 nations agreed to limit global warming to well below 2 degrees Celsius by the end of the century and aim for a 1.5 deg C rise above pre-industrial times if possible.
The pact also says nations' carbon emissions should reach net-zero around 2050 with major economies including China, Japan and the EU pledging to be carbon zero by mid-century.
To achieve the Paris targets, the United Nations says the world must quickly start shifting away from fossil fuels, with deep carbon cuts needed this decade, or risk ever more extreme weather events as the planet keeps heating up.
Renewable energy and electric vehicle costs have plunged in recent years, leading to a surge in investment. But while a number of governments have pledged to spend a portion of their pandemic recovery cash on green solutions, governments have also continued to support the fossil fuel sector.
"More money for green solutions does not automatically mean that there is less money for fossil fuels," Ms Katrin Ganswindt, coal divestment researcher and campaigner at Urgewald, told The Straits Times.
The authors say the 12 projects are a litmus test for the finance industry.
The authors found that the top 20 investors provided US$535 billion, almost half of the total US$1.1 trillion. Financial institutions from the United States lead the list.
Holding bonds and shares worth US$110 billion, BlackRock is the top investor in the coal, oil and gas companies behind the dozen projects.
Vanguard is next with US$104 billion in bonds and shares, while State Street is in third place with US$50.8 billion.
The top 20 creditors provided more than half of the total funding: US$949 billion out of the total US$1.6 trillion.
US banks CitiGroup, Bank of America and JP Morgan Chase topped the list with an accumulated US$295 billion. Nine European banks are among the top 20, including Barclays at US$66.4 billion and HSBC at US$55.2 billion. Japanese banks Mitsubishi, Mizuho and SMBC provided financing worth US$149 billion.
Chinese financial institutions are also on the list: Bank of China at US$26.5 billion and ICBC at $24.9 billion.
The companies that have received the most funding since the Paris Agreement are BP, ExxonMobil, Petrobras, State Grid Corporation of China and Occidental Petroleum with a total of US$358 billion in loans and underwriting from January 2016 to August 2020.
One of the projects is a major expansion of gas production at Burrup Hub, in north-west Western Australia, by Woodside Energy and its partners.
An extension to the existing North West Shelf Project would emit an estimated 4.4 billion tonnes of CO2 and other emissions over its 50-year lifetime, or roughly eight times Australia's greenhouse gas emissions for last year, Woodside says.
In the Philippines, 13.8 gigawatts of new coal plants are planned. But it is not clear if all of them will go ahead after the Philippine Department of Energy in October (2020) announced a moratorium on issuing permits to new coal-fired power plant projects in the country.
Bangladesh has also signalled it might cancel most of coal plants planned there.
"The recent coal moratorium for new coal plants in the Philippines and the proposal to cancel the planned construction of 13 out of 16 proposed coal plants in Bangladesh may be seen as a positive sign in terms of a potential future end of coal," said Ms Ganswindt of Urgewald.
However, the 13GW of coal that are currently in the pipeline in the Philippines will most likely not be affected by the moratorium and will still be constructed, she added.
Other projects on the list include a major expansion of oil and gas extraction by Norway. The Norwegian government announced a planned bid for 136 new oil blocks, with 125 of the licences located in the Barents Sea.
Based on oil and gas reserves, the project could result in an estimated 4.5 billion tonnes of CO2-equivalent being released, the authors say.