The Oil & Gas Bank
According to Friends of the Earth Scotland, the Royal Bank of Scotland (RBS) is rapidly accelerating our planet towards its climatic tipping point by financing fossil fuel extraction. Mika Minio Paluello of Platform explains why climate change campaigners are targeting RBS.
The second largest bank in Europe, RBS has global assets of over $1120 billion including high street brands NatWest, Direct Line and Churchill Insurance. Despite its public image as a “good neighbour,” created through arts and sports sponsorship, the bank’s core business is causing enormous harm to the environment and society.
Publicly identifying itself as “The Oil & Gas Bank”, RBS provides oil corporations with the cash to build and operate new drilling rigs, pipelines and oil tankers. From West Africa to the Caribbean, from the Caucasus to the Middle East, RBS loans are playing a key role in forcing open the new carbon frontier, causing environmental destruction, disruption of indigenous peoples and increased conflict on every continent. Quoted recently as claiming that there was still “debate” among scientists about the causes of global warming, RBS has even made www.theoilandgasbank.com one of its homepages.(1)
Through its commitment to fossil fuels, RBS is accelerating climate change. The bank’s loans led to emissions of over 43.7 million tones in 2006 – greater than Scotland’s. If carbon dioxide molecules had corporate tags of responsibility, the atmosphere would be full of RBS logos mingling with BP, Exxon and Shell.
Embedded emissions
At first glance, high street banks’ impacts on climate change might look minor, with carbon emissions from computer screens and business trips. Yet the RBS’ core business of providing loans, investment and accounts plays a central role in the exploration, extraction and shipping of carbon-intensive fossil fuels – causing new emissions. While “internal” emissions from the bank’s own energy use are comparatively low, the carbon emissions “embedded” within RBS’ financial products are staggering, and rising rapidly. In 2005, RBS project loans to oil and gas alone caused 36.9 million tonnes of CO2 emissions, equivalent to more than a quarter of UK homes (6.2 million UK households). By 2006, emissions had passed 43.7 million tones – greater than those of Scotland.(1) These emissions will continue to be pumped into the atmosphere 20-30 years after deals are struck – RBS’ drive to squeeze unsustainable profits out of fossil fuels is locking huge emissions into our future.
While the bank is financing some renewable energy projects, these remain minor compared to its support for oil and gas. Further, wind and solar power must be alternative, not additional targets for loans.
Breaking through the carbon frontier
RBS has manoeuvered itself into a position where it is intimately involved in forcing open the oil & gas frontier. As extraction in traditional oil regions peaks and begins to decline, oil and gas corporations are searching further afield, moving into the deep waters off West Africa, landlocked countries of Central Asia and the frozen Arctic. Opening up the new carbon resources involves deeper drilling, longer pipelines and new technology to deal with adverse weather conditions.
Many regions within the new oil and gas frontier are ecologically and politically fragile. Intensive exploration and production cause pollution, displacement, abuse of human rights and environmental destruction.
Niger Delta – satellite fields, conflict and kidnappings
In December 2005, RBS and three other international banks arranged a $270 million loan to the Satellite Oil Fields Project in the Niger Delta. Operated by Exxon and the Nigerian National Petroleum Corporation, the project aims to extract up to 125,000 barrels a day from five oil fields, including Abang, Oyot and Itut.
The crude from these fields will be pumped to the onshore Qua Iboe Terminal for export. Exxon’s failure to pay compensation for a 1997 oil spill, despite a court ruling, led to threats to shut down the Qua Iboe Terminal by the Movement for the Emancipation of the Niger Delta in April 2006. Since then, Exxon has attracted increasing community opposition. In October 2006, five foreign oil workers were kidnapped from near the Eket Exxon operational base.
Currently, the bank is advising Shell and the Nigerian National Petroleum Corporation on how to finance Nigeria’s largest new LNG facility, which will produce 22 million tonnes of liquefied natural gas each year. Constructed in a free trade zone in the Western Delta, the Olokola project is being built on the land of Ode-Omi, an agrarian and fishing community. Local villagers have complained that they weren’t consulted over resettlement plans, and heard about the project via the media. Vice-chairman of the village Alleluyah Nla said “They said we will no longer fish in the river, that our crops will not yield fruits again and that our soil will be degraded.” Local residents feel sidelined and alienated, after being ignored and not informed over their rights in the matter.
Oil and gas extraction in the Delta is widely recognised as one of the primary drivers for conflict, corruption and underdevelopment. Spills and gas flaring have caused illness and led to community resistance, most famously in the case of the Ogoni.
BTC – crude, repression and mineral water
RBS was the only British bank to participate in a $1.6 billion loan agreement for BP’s Baku-Tbilisi-Ceyhan pipeline (BTC), agreed in February 2004. BTC carries 1 million barrels of oil each day from the Caspian Sea, across Azerbaijan, Georgia and Turkey to the Mediterranean. When consumed, this oil will release 160 million tonnes of carbon emissions into the atmosphere every year – 28% of total UK annual emissions.
Operational after three years of construction, the pipeline props up authoritarianism in Azerbaijan, rendered numerous Georgian homes uninhabitable and polluted water supplies, and led to intimidation of critics and the Kurdish population by the Turkish state. Fishermen lost their livelihoods and the pipeline threatens the Borjomi National Park, source of Borjomi mineral water, Georgia's largest export.(1)
Tar sands and heavy oil
RBS’ embedded emissions look set to grow further through a new focus on unconventional “dirty” oil, unlocking previously inaccessible fossil fuels from coal bed methane and tar sands. Jim McBridge from RBS Houston stated that “We believe there's going to be as much as $40 billion spent on oil-sands development in Canada, so this is another energy-financing growth area for us. Again, drilling dollars will be needed.” The bank was already lead arranger for $800 million loans to the Long Lake Oil Sands project in 2004 and 2006.
Strip-mining and drilling for tar sands threatens to turn the Canadian boreal forest and wetlands, both major carbon storehouses, into wastelands. Toxic tailing ponds and water pollution are raising concerns about surprisingly high levels of cancer.(1) The high level of energy needed for conversion of tar sands to synthetic oil means that the process produces up to three times the emissions of conventional crude production.
Conclusions
No bank has fully addressed its climate responsibilities. However, while competitors of RBS are beginning to recognise that their loans and investment play an important role in either accelerating climate change or shifting to a low carbon economy, RBS is burying its head in the sand.
The worst aspect of RBS’ irresponsible lending is its long-term nature. A loan made to an oil project doesn’t enable continued fuel production in the present. New rigs and pipelines generally only start pumping five years down the line – but continue for 20 years or more. The “Oil & Gas Bank’s” short-term profit-maximising decisions could still be causing climate damage beyond 2030.
What you can do:
Read 'The Oil and Gas Bank- RBS & the financing of climate change' [PDF] by Mika Minio-Paluello from Platform.
For over 20 years, PLATFORM has been bringing together activists and artists to create innovative projects driven by the need for social and environmental justice. The report was published by BankTrack, Friends of the Earth Scotland, New Economics Foundation and People & Planet.
If you have an RBS or NatWest account, move it – but make sure to tell them why. Otherwise it might have been the interest rates…
RBS & NatWest pour enormous efforts into persuading students to open accounts, knowing that they are unlikely to switch. The NUS and many university student unions bank with RBS-NatWest, and take sponsorship from them. If you are or know students, kick up a fuss. www.peopleandplanet.org.uk
RBS also prides itself on being a lead banker for charities – many of which now recognise that climate change is a major issue. If you donate to a charity that banks with RBS, ask them to switch.
RBS financed the South Hook LNG Terminal in Pembrokeshire and the pipelines, liquefaction plant and tankers in Qatar that feed it. The Pembrokeshire terminal and pipeline it feeds into have seen vocal protest and demonstrations from local residents and climate activists. http://risingtide.org.uk/node/182
First published Ethical Consumer 107, July/Aug 2007
References
1 “The Oil & Gas Bank – RBS and the financing of climate change,” Mika Minio-Paluello, Platform 03/07 |