While there was hardly a ringing endorsement in the room of official policy; nor was there any pervasive doubt the decade or more of self-harming energy policy in Australia would halt the shift to renewables and alternative base load generation.
"There is no shortage of evidence… of myriad shifts towards lower carbon-intensity generation in Australia.”
Yet despite that tidal trend, it is not as if carbon intensive generation will rapidly disappear. There may be a steady drumbeat of warnings around stranded assets, particularly in the thermal coal sector, but many funders are still prepared to assume the risk.
Indeed, financing of so-called “extreme fossil fuels” (tar sands, Arctic and ultra-deepwater oil, liquefied natural gas (LNG) export, coal mining, and coal power) increased by 11 percent in 2017 with the world’s major banks committing $US115 billion.
I moderated the panel for the Renewable Energy discussion at the Australia-Israel Chamber of Commerce event (and bluenotes will soon publish a more detailed report on the views presented) and consensus was even where policy was absent or an impediment, market forces would drive the shift away from such fuels.
Those forces included the sustainability mandates of financiers – including this bank, ANZ, as well as institutional investors – consumer preferences, shifting cost curves and, ultimately, public opinion and regulation. Yet this latest survey of fossil fuel funding finds while there was a decline in 2016, when the Paris climate accord was signed by over 190 countries, it picked up again last year.
The report, Banking on Climate Change, produced by a panel of environmental pressure groups, attributed that to higher funding for tar sands extraction and pipeline projects, which more than doubled last year to $US47 billion.
The main US and Canadian banks increased their financing while European, Chinese, Australian and Japanese banks decreased it. The big four Australian banks were at the bottom of the survey of 36 global banks in their funding with Commonwealth Bank at 31 and ANZ, Westpac and National Australia Bank at 34, 35 and 36 respectively.
Royal Bank of Canada, Toronto Dominion Bank and JPMorgan Chase were highlighted as the three leading banks for financing extreme fossil fuel projects.
As I say, at an event like that hosted by the AICC, the audience tends to be self-selecting but there is no shortage of evidence in the market of myriad shifts towards lower carbon-intensity generation in Australia, reflected in these sorts of surveys.
For example, on bluenotes ANZ’s head of Sustainable Finance Solutions, Loans and Specialised Finance, Katharine Tapley – a panellist at the AICC event – outlines the size and shape of what is known as the 'sustainability bond' market.
The proceeds of these bonds are notionally earmarked to finance or refinance ‘green’ or ‘social’ assets or businesses.
“Globally the market was worth $US 160 billion in issuances in 2017, up from $US 87 billion the year before,” Tapley notes.
“Europe accounts for 60 per cent of the issuance and Asia just 25 per cent. Proceeds at this stage go primarily to renewable energy, green buildings and transport. In Australia, the green bond market in 2017 totalled $A3 billion over 11 transactions, up from $900 million over four transactions in 2016.”
The latest of these surveys of extreme fossil fuel funding is obviously produced by a special interest group but its views are hardly extreme in the current environment.
“It is environmentally, reputationally, and often financially risky for banks to back these fossil fuel projects and companies,” the group argues.
“More and more, the public is tying the impacts of fossil fuels to the financial institutions backing the sector. The authoring organisations of this report - BankTrack, Honor the Earth, Indigenous Environmental Network, Oil Change International, Rainforest Action Network, and the Sierra Club - demand that banks end financing for extreme fossil fuels, and all expansion of the fossil fuel industry, while ensuring that their financing does not contribute to human rights abuses.”