Canadian banks provided almost US$104 billion in fossil fuel funding last year despite the urgent need to reduce emissions, says the latest annual Banking on Climate Chaos report. Bank towers are shown from Bay Street in Toronto's financial district, on Wednesday, June 16, 2010. Photo: Adrien Veczan/The Canadian.
Canadian banks provided almost US$104 billion in fossil fuel funding last year despite the urgent need to reduce emissions, says the latest annual Banking on Climate Chaos report.
The report out Monday from a coalition of climate groups said the total includes US$28.2 billion from RBC to place it seventh globally and US$24 billion from Scotiabank to rank 10th.
The top 60 banks together committed US$708 billion.
For most of Canada’s five biggest banks, 2023 was among their lowest levels of oil and gas financing in the eight years since the Paris climate agreement.
BMO had its outright lowest year of fossil fuel financing since 2016, with US$15.8 billion. CIBC, TD and RBC each had their lowest with the exception of pandemic year 2020, while it was the fourth-lowest year for Scotiabank.
While reduced, the numbers are still stark, said Richard Brooks, climate finance director at Stand.earth.
“There’s still massive amounts of money on the scale of, you know, tens of billions of dollars that are flowing into extreme forms of oil and gas, that are flowing into expansion projects that lock us in for a long time.”
Canadian banks understand their important role in helping lead an orderly transition to a low-carbon future, said Canadian Bankers Association spokeswoman Maggie Cheung in a statement.
“Firm commitments are required to accelerate clean economic growth and that’s why banks are implementing climate action plans that set specific targets to meet the demands of this global challenge.”
Bank climate targets are fairly long-term, including their net-zero emissions goal of 2050. Only BMO has set an absolute reduction target before then.
The reduced fossil fuel funding last year could be due to shifts in the oil and gas industry. There are no major new oilsands projects on the horizon, while oil and gas companies have also been reaping major profits that help them self-fund costs and rely less on lenders.
Funding levels could fall further this year as major projects like the Trans Mountain pipeline expansion and Coastal GasLink pipeline are now finished.
The report notes the companies behind the projects were among the top recipients of fossil fuel expansion funding globally. TC Energy Corp. raised US$15.3 billion from the 60 banks covered in the report, while Trans Mountain Corp. raised US$9.54 billion.
Calgary-based Enbridge Inc. was ranked first with US$35 billion raised, though the report counts money it used for acquisitions as well as expanded pipeline capacity.
While the trends in the oil and gas industry could mean less funding is needed from banks, Brooks said it’s still important for the institutions to put policies in place that will ensure they reduce financed emissions.
He said he was concerned that banks are instead walking back policy commitments, including BMO, which curbed restrictions on lending to coal producers.
“If there’s no policy in place that limits financing intentionally, then when a new project comes up, who’s going to be first in line to finance that project?”
Story by Ian Bickis
