Highly unlikely that any major polluting project could go ahead in the country without investment by the big four, Market Forces campaigner says

This article is more than 5 years old

This article is more than 5 years old

Australia’s “big four” banks have bucked a global trend by heavily favouring investment in fossil fuel projects over renewable energy by $6 to $1 since the global financial crisis, according to a new report.

The analysis by Market Forces revealed ANZ was the clear leader in funding coal, oil and gas projects in Australia since 2008, pouring in $12.6bn.

But it was Commonwealth Bank that most heavily skewed its investments in favour of fossil fuels, with $9.9bn in loans dwarfing its renewable projects by a factor of 13 to one.

The study found the big four – rounded out by National Australia bank ($8.3bn) and Westpac ($5.9bn) – dominated fossil fuel finance in Australia, accounting for $36.7bn, or more than a quarter of $134bn in total funding by more than 150 financial institutions from 2008 to 2014.

The four banks participated in nearly three-quarters of the 182 loans made to the sector in that time, the study found. ANZ alone had a hand in 99 deals.

A Market Forces campaigner, Julien Vincent, said the report left “no doubt that Australia’s big banks are the linchpin of major fossil fuel projects in Australia”.

“With the big four involved in three-quarters of the deals to take place in the sector, it’s highly unlikely that any major polluting project could go ahead without their investment,” he said.

“Banks have a pivotal role to play in driving our economy to one that is less carbon-intensive but, despite the fact that globally investment in new renewable energy is outstripping that for fossil fuels, Australian banks remain heavily skewed in favour of greenhouse-intensive projects.

“While the banks publicly herald their sustainability credentials, their lending practices tell an entirely different story.”

NAB had the biggest proportion of investment in renewable energy, outlaying $2.49bn or 13.2% of total loans to the sector. Its investments in fossil fuels outstripped renewables by 3.3 to one, the least skewed of the big four.

The report did find that the big four’s share of total debt issued to the fossil fuel sector more than halved from 40% in 2008 to less than 20% in 2012 and 2013.

But this was driven by a spike in foreign investment via the realisation of several multibillion-dollar deals in liquefied natural gas.

The Australian banks’ share of fossil fuel funding soared to 42% last year, its highest proportion since the global financial crisis. This was despite all the big four except ANZ cutting their net lending to the sector last year.

Market Forces – a financial watchdog project linked to the environmental group Friends of the Earth Australia – argues its report highlights the heightened risk of banks being tied up in “stranded assets” as the world’s limited carbon budget dictates that less viable fossil fuel projects fall by the wayside.

The study points to the big four’s $900m combined investment in Queensland’s Wiggins Island coal export terminal, which conservationists argue is unlikely to run at full capacity owing to a cyclical downturn in the world coal export market.

Vincent said the risk of such investments had become “as much financial as environmental”. He said this should be at the centre of financing decisions on Queensland’s Galilee basin coalfields and associated railway and infrastructure at Abbot Point coal port.

The Commonwelath Bank invested $707m in Abbot Point, Westpac $250m and Deutsche Bank $167m in a loan signed in November 2013.

The report found that after the big four local banks, the main sources of Australian oil, gas and coal debt financing were banks from Japan ($27.4bn), the US ($11.6bn), China ($11bn), France ($7.5bn) and Britain ($6.5bn).