FTM investigation: Big banks bet on planet failure - $1.6 Trillion allocated to fossil fuel industry

While humanity is facing the effects of climate change every day, some of the top financial institutions have pumped over $1.6 trillion into companies operating in the fossil fuel industry, supporting thousands of new polluting projects, according to a journalistic investigation published yesterday by the website Follow The Money (FTM).

From the data obtained by Follow the Money, it appears that among the main actors are banks from China, but also European giants such as Barclays, Deutsche Bank and Credit Agricole, while the main beneficiaries are companies such as TotalEnergies from France and Eni from Italy. According to analysts consulted by the cited source, these investments amount to a cynical bet by the respective banks on the failure of the energy transition and on humanity's inability to limit global warming to 1.5 degrees Celsius above pre-industrial levels.

The experts' warnings are clear and urgent. In 2021, the International Energy Agency (IEA) sounded an unequivocal alarm: "there must be no new financing for fossil fuels if the world is to limit warming to 1.5 degrees Celsius.” Yet more than 2,300 new oil, gas and coal projects were developed between 2021 and 2024, according to CarbonBombs.org, an initiative of four NGOs that monitor the impact of these "carbon bombs” on the planet. Their research shows that, taken together, emissions from these projects - both new and existing - would exceed 11 times the remaining global carbon budget, that is, the maximum amount of CO2 we can emit without exceeding the climate safety threshold. At the current rate of emissions, this budget will be exhausted in less than four years, according to the Potsdam Institute for Climate Impact Research's Carbon Clock.

Follow The Money journalists claim that the issue will be on the agenda of the COP30 climate summit, which will take place next month in Belem, Brazil, and which aims to determine concrete measures to keep global temperature rise below 1.5 degrees Celsius.

Fergus Green, an associate professor at University College London, told the cited source that "governments, investors and financial institutions must listen to the voice of scientists and stop supporting new fossil fuel projects.” Green, who recently published a study in the journal Science, claims that "there is no need for new investment in fossil fuels in a 1.5 degrees Celsius scenario.” Existing projects can cover global energy demand until 2050, confirming the IEA's conclusion from 2021. "We need to build an international norm against new fossil fuel projects,” he told Follow The Money.

CarbonBombs.org's analysis linked five major data sets to track the connection between new projects, the companies behind them, and the banks that finance them. The top ten banks involved come from Canada, China, Japan, and the United States, but top European banks include Barclays (UK), Credit Agricole (France), and Deutsche Bank (Germany). The beneficiaries are big names in the energy sector: Eni received $33.1 billion, TotalEnergies $21.8 billion, and China National Offshore Oil Corporation was financed by the banking system with $7.3 billion. Together, these three companies are responsible for 364 new projects between 2021 and 2024, or 16% of the global total. A lesser-known case is that of Mercuria Energy Group, a Swiss commodities trading company, which has benefited from an allocation of more than $23.5 billion since 2021. Its subsidiary, Phoenix Global Resources, holds concessions in the Vaca Muerta region of Argentina, which has the second-largest shale gas reserves and the fourth-largest shale oil reserves in the world. If all of these reserves were burned, they would release 24 billion tons of CO2, eight times the annual emissions of the European Union, according to Global Energy Monitor.

Faced with the above accusations, the banks are trying to justify themselves. Credit Agricole told the cited source that "the companies it finances are diversified and may have major decarbonization projects, such as those in renewable energy or hydrogen,” adding that corporate financing is "a prerequisite for being able to support them in these areas as well.” Deutsche Bank declined to confirm the figures, saying it "does not comment on client relationships” and stressed that it had "withdrawn some of its exposure to high-carbon sectors,” while Barclays remained silent.

However, experts warn that these investments are not only a threat to the climate, but also a financial gamble even risky. Sam Fankhauser, a professor of climate economics at Oxford University, says that "many of these investments will become stranded assets and will have to be taken off the balance sheet.” In his opinion, this is not only bad news for the environment, but also for investors: "It is bad news for those who think they will make money from something that, in reality, will not bring them profit,” says Fankhauser, who added for the cited source that "the risk-return profile of renewable energy is today much better than that of fossil fuels.”

Moreover, data from the International Renewable Energy Agency (IRENA) confirms this trend. In 2024, investments in solar energy were, on average, 41% cheaper than those in fossil fuels, and wind energy 53% cheaper.

Professor Sam Fankhauser argues that governments must act decisively, using a mix of policies: subsidies for green energy, carbon taxes and strict regulations to limit polluting operations. "It must be very clear to fossil fuel companies and their financiers that there is no longer a viable commercial basis for this model,” he warns.

The above shows that while the planet is facing the tragic effects of climate change, some of the massive capital flows continue to flow to the industries that are fueling the crisis. Every dollar invested in a new oil or coal deposit is a blow to the survival chances of future generations. The big banks can no longer claim neutrality. They have a choice between short-term profit and the future of the planet, and the choice they are making now is essential for sustainable development.