Meet the banks and investors funding the LNG 'carbon bomb'

Olivia Rosane
and
Common Dreams
06 December 2024
The Haisea Kermode, an LNG-powered tug, is moored at the LNG Canada tugboat berth in Kitimat, British Columbia, Canada November 19, 2024. REUTERS/Jennifer Gauthier

Liquefied natural gas developers have expansion plans that could release 10 additional metric gigatons of climate pollution by 2030, and major banks and investors are enabling them to the tune of nearly $500 billion.

A new report published by Reclaim Finance on Thursday calculates that, between 2021 and 2023, 400 banks put $213 billion toward LNG expansion and 400 investors funded the buildout with $252 billion as of May 2024.

"Oil and gas companies are betting their future on LNG projects, but every single one of their planned projects puts the future of the Paris agreement in danger," Reclaim Finance campaigner Justine Duclos-Gonda said in a statement. "Banks and investors claim to be supporting oil and gas companies in the transition, but instead they are investing billions of dollars in future climate bombs."

"While banks will secure their profits, it's at the expense of frontline communities who often will not be able to get their livelihoods, health, or loved ones back."

The International Energy Agency has concluded since 2022 that no new LNG export developments are required to meet energy demand while limiting global temperatures to 1.5°C above preindustrial levels. Despite this, LNG developers have upped export capacity by 7% and import capacity by 19% in the last two years alone, according to Reclaim Finance. By the end of the decade, they are planning an additional 156 terminals: 93 for imports and 63 for exports.

Those 63 export terminals, if built, could alone release 10 metric gigatons of greenhouse gas emissions—nearly as much as all currently operating coal plants release in a year. What's more, building more LNG infrastructure undermines the green transition.

"Each new LNG project is a stumbling block to the Paris agreement and will lock in long-term dependence on fossil fuels, hampering the shift toward low-carbon economies," the report authors explained.

Many large banks have pledged to reach net-zero emissions, yet they are still financing the LNG boom. U.S. banks are especially responsible, Reclaim Finance found, funding nearly a quarter of the buildout, followed by Japanese banks at around 14%.

The top 10 banks funding LNG expansion are:

  1. Mitsubishi UFG Financial Group (Japan)
  2. JP Morgan Chase (U.S.)
  3. Mizuho (Japan)
  4. Gazprombank (Russia)
  5. SMBC Group (Japan)
  6. Bank of America (U.S.)
  7. Citigroup (U.S.)
  8. Goldman Sachs (U.S.)
  9. Morgan Stanley (U.S.)
  10. RBC (Canada)

While 26 of the banks on the report's list of top 30 LNG financiers have made 2050 net-zero commitments, none of them have adopted a policy to stop funding LNG projects. None of top 10 banks have any LNG policy at all, despite the fact that Bank of America and Morgan Stanley helped found the Net Zero Banking Alliance. Instead of winding down financing, these banks are winding it up, as LNG funding increased by 25% from 2021 to 2023. In 2023 alone, 1,453 transactions were made between banks and LNG developers.

All of this funding comes despite not only climate risks, but also the local dangers posed by LNG export terminals to frontline communities. Venture Global's Calcasieu Pass LNG, for example, has harmed health through excessive air pollution while dredging and tanker traffic has disturbed ecosystems and the livelihoods of fishers.

"Banks still financing LNG export terminals and companies are focused on short-term profits and cashing in on the situation before global LNG oversupply kicks in. On the demand side, financing LNG import terminals delays the much-needed just transition," said Rieke Butijn, a climate campaigner and researcher at BankTrack. "While banks will secure their profits, it's at the expense of frontline communities who often will not be able to get their livelihoods, health, or loved ones back. People from the U.S. Gulf South to Mozambique and the Philippines are rising up against LNG, and banks need to listen."

The report also looked at major investors in the LNG boom. Here too, the U.S. led the way, contributing 71% of the total backing.

The top 10 LNG investors are:

  1. BlackRock
  2. Vanguard
  3. State Street
  4. Fidelity Investments
  5. Capital Group
  6. GPFG
  7. JP Morgan Chase
  8. Brookfield Asset Management
  9. Blackstone
  10. MSBI

Just three of these entities—BlackRock, Vanguard, and State Street—contributed 24% of all investments.

Reclaim Finance noted that it is not too late to defuse the LNG carbon bomb.

"Nearly three-quarters of future LNG export and import capacity has yet to be constructed," the report authors wrote. "This means that banks and investors can still act to put an end to the unrestrained support they offer to the companies responsible for LNG expansion."

To this end, Reclaim Finance recommended that banks establish policies to end all financial services to new or expanding LNG facilities and to end corporate financing to companies that develop new LNG export infrastructure. Investors, meanwhile, should set an expectation that any developers in their portfolios stop expansion plans and should not make new investments in companies that continue to develop LNG export facilities. Both banks and investors should make clear to LNG import developers that they must have a plan to transition away from fossil fuels consistent with the 1.5°C goal.

"LNG is a fossil fuel, and new projects have no part to play in a sustainable transition," Duclos-Gonda said. "Banks and investors must take responsibility and stop supporting LNG developers and new terminals immediately."