BNP Paribas stops financing new oil and gas fields in green clampdown
Financing new fossil fuel projects in the North Sea just became even more challenging for companies, with BNP Paribas announcing it will no longer provide any financing dedicated to new oil and gas fields.
France’s largest bank also confirmed it is targeting a 80 per cent cut of its oil exploration financing by 2030 – reflecting a sharp divestment from the sector.
“BNP Paribas no longer provides dedicated financing for the development of new oil and gas fields, regardless of the financing terms,” the bank confirmed today.
The financial institution is pushing to align its loan portfolio with net zero – with the International Energy Agency warning that countries need to halve their emissions every decade until 2050 to meet the goals of the Paris Climate agreement.
This includes limiting global temperature rises to well below two degrees from pre-industrial levels.
BNP Paribas was considered within the industry as one of the Big Three lenders to the North Sea alongside ING and DNB Group.
The bank offered North Sea oil and gas companies reserve-based lending facilities which helped fund new projects based on potential supplies.
Fossil fuel exploration remains a valid method of energy generation in the government’s energy security strategy.
Earlier this year, BNP Paribas had already announced plans to cut oil explorations financing by 80 per cent by the end of the decade, and today it confirmed it was on track to meet its climate change targets for power generation, oil and gas and automotives.
While a blow the oil and gas sector, BNP Paribas’ announcement reflects a trend of banks pulling out of fossil fuel lending and shifting towards lower-carbon sectors.
BNP Paribas French rival Societe Generale last year unveiled plans to slash its financial exposure to the oil and gas production sectors 20 per cent by 2025 compared to 2019.
Meanwhile, Credit Agricole pledged it would stop financing oil extraction projects by 2025.
HSBC and Standard Chartered have also reduced their risk appetite for fossil fuel projects.
Alongside oil and gas, BNP Paribas revealed it had set new portfolio alignment targets for 2030 for the emissions-heavy steel, aluminum and cement sectors.
It is now aiming to cut the ’emissions intensity’ of its investments by 10 to 25 per cent from last year.