Feb 24, 2020 - Energy & Environment

JPMorgan Chase to pull support for some fossil fuels

Illustration: Sarah Grillo/Axios

JPMorgan Chase said Monday that it won’t directly finance new oil and gas development in the Arctic and will significantly curtail its financing of the extraction and burning of coal.

Why it matters: JPMorgan is the world’s largest funder of fossil-fuel companies, according to a report by the Rainforest Action Network (RAN). The announcement follows similar moves by other big banks and investment firms, including Goldman Sachs and BlackRock.

Driving the news: Timed to the company’s annual investor day on Tuesday, the announcement includes many parts — though restriction of fossil-fuel financing is potentially the most impactful.

  • The bank is prohibiting all kinds of direct financing worldwide for new or existing coal plants, unless the plants use technology to capture carbon dioxide emissions (which remains prohibitively expensive in most instances).
  • Earlier policies said the company wouldn’t finance coal plants or mines in developed countries only.
  • The company is restricting most services — including lending and access to capital markets — to companies that get most of their revenue from coal mining, and it's setting a 2024 goal to phase out remaining credit exposure to those companies.

The big picture: Grassroots and investor activists have been targeting major corporations, including JPMorgan, for their support of the fossil-fuel industry through protests and shareholder resolutions. This pressure is rising as governments fail to act and the world remains heavily reliant upon these fuels.

  • JPMorgan economists warned recently of "catastrophic outcomes" if climate change isn't adequately addressed, according to a client note viewed by the BBC.

By the numbers: JPMorgan is the largest lender to the oil, natural gas and coal industries, according to RAN.

  • The bank loaned $196 billion to fossil-fuel companies between 2016 and 2018, according to the RAN report.
  • That’s nearly a third higher than the bank that ranks second, Wells Fargo.

But, but, but: The restrictions affect a small portion of the company’s fossil-fuel businesses, according to Jason Opeña Disterhoft, a senior campaigner on these issues for RAN.

  • The biggest new restriction is on financing for companies whose businesses are more than 50% coal mining, which amounts to less than 0.6% of its overall $196 billion lending to the sector over the last three years, according to Disterhoft.
  • “The hard restrictions in this new policy only affect a small portion of their fossil lending,” Disterhoft told Axios Monday.
  • The restrictions don’t touch other major parts of the sector, such as pipelines outside of the Arctic, natural gas and oil sands.

One level deeper: The bank is also announcing it will finance $200 billion worth of projects supporting the United Nations’ sustainable development goals. Many (but not all) of those projects are related to climate change, though $50 billion is going toward green initiatives explicitly, per the company.

Go deeper: Goldman Sachs moves away from Arctic oil and coal

Go deeper

Why big banks are breaking up with some fossil fuels

Illustration: Sarah Grillo/Axios

JPMorgan Chase is the latest financial giant to unveil new climate commitments, and like its peers, it is hard to disentangle how much is motivated by pressure, conscience or making a virtue of necessity.

Why it matters: The move comes as grassroots and shareholder activists are targeting the financial sector's fossil energy finance, especially amid federal inaction on climate.

UBS adds new fossil fuel lending restrictions

Photo: Peter Klaunzer/AFP via Getty Images

UBS said Thursday it will not finance new Arctic offshore oil projects, new coal mines or new oil sands projects.

The big picture: The Swiss banking giant is the latest in a string of banks to announce wider restrictions on fossil fuel finance as investor and activist pressure grows.

Trump's power-plant carbon rule has conflicting impact

President Trump. Photo: BRENDAN SMIALOWSKI / Contributor

The Environmental Protection Agency's rule controlling power plants’ carbon emissions cuts C02 but preserve more coal electricity, according to a recent analysis by the U.S. Energy Information Administration.

Why it matters: It’s believed to be the first such EIA analysis of the regulation, putting meat on the bones of one of President Trump’s biggest regulatory moves to scale back rules from his predecessor.