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Banks in the City of London have poured more than $100bn (£75bn) into companies developing “carbon bombs” – huge oil, gas and coal projects that would drive the climate past internationally agreed temperature limits with catastrophic global consequences – according to a study.
Nine London-based banks, including HSBC, NatWest, Barclays and Lloyds are involved in financing companies responsible for at least 117 carbon bomb projects in 28 countries between 2016 – the year after the landmark Paris agreement was signed – and 2023, according to the study.
If the projects go ahead, the study says they will have the potential to produce 420bn tonnes of carbon emissions, equivalent to more than 10 years of current global carbon dioxide emissions.
“Despite the UK’s seemingly ambitious climate plans, it is astonishing how much money has flowed from UK banks to companies worldwide developing the biggest climate-wrecking and damaging projects since 2016,” said Fatima Eisam-Eldeen, a lead analyst at the Leave It in the Ground Initiative, the climate thinktank that produced the study. “Real climate ambition and leadership would mean proper financial regulation not only within the country but also beyond the country’s borders by stopping all financial flows to companies exacerbating the climate crisis we all suffer.”
The report follows a Guardian investigation that revealed how big fossil fuel companies were quietly planning scores of vast projects that threaten to shatter the effort towards the international goal of limiting global heating to 1.5C above preindustrial levels.
In that investigation the countries found to have the most carbon bomb plans were the US, Saudi Arabia, Canada, Russia and China, with the UK playing a minor role.
However, the findings, which look at how the companies behind these projects are being financed, reveal the UK is a key financial hub for destructive fossil fuel mega-projects, financing companies that are involved in more than a quarter of the carbon bombs identified across the globe.
Lucie Pinson, the director of the campaign group Reclaim Finance, said UK banks were turning the City of London into “Europe’s stronghold for financing fossil fuel expansion, undermining the role the UK has played in advancing climate finance”.
She added: “As international tensions escalate, these banks must now choose which world they want to help build, Trump’s world of fossil fuels, where the most powerful profit at the expense of millions, including their own fellow citizens, or a world where economic, financial and political leaders roll up their sleeves and drive the ecological transformation of our economies.”
The new study used the list of carbon bomb projects identified in the original 2022 research then worked out which companies were behind them. It then tracked who was financing these companies.
When approached by the Guardian, some banks objected to the study’s methodology, questioning whether it was fair to attribute the entire emissions of a carbon bomb to a bank that had given finance to a company as a whole rather than to the specific project.
But the researchers say that banks usually fund the company rather than specific fossil fuel development, and that this finance is critical in allowing the companies to push ahead with these destructive projects.
The report found HSBC is financially supporting companies involved in the most carbon bomb projects: 104. It calculated that emissions caused by burning the extracted fossil fuel from these projects would add up to 392 gigatons – or 392bn metric tonnes – of carbon dioxide.
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Standard Chartered bank came next, supporting companies involved in 75 carbon bombs, then Barclays, financing companies involved in 62 mega-projects. Lloyds backed firms involved in 26 and NatWest financed firms involved in 20.
HSBC, Lloyds and Standard Chartered declined to comment on the report when approached by the Guardian.
A Barclays spokesperson said it could not comment on individual projects but that the bank provided “financing across the energy sector: supporting energy security, working with customers and clients on their low-carbon transition and mobilising sustainable and transition financing with a target of $1tn by 2030. We are taking pragmatic steps to meet our 2030 financed emissions targets, while helping the world meet its energy needs securely and affordably.”
A spokesperson for NatWest said it had lent more than £93bn in climate and sustainable funding and financing since the start of 2021, against a target of £100bn by the end of this year. They added: “Whilst we recognise the importance of the entire energy industry in furthering the goals of decarbonisation and energy security, our lending to oil and gas represents less than 0.7% of our financing activity.”
