Two prominent British banks on the main commercial streets have come under fire for allegedly providing funding for the growth of fossil fuel operations in the North Sea, despite agreeing to follow the net zero climate objective.

HSBC and NatWest have provided tens of millions in finance to Ithaca Energy, a British oil and gas company that is playing a key role in plans to exploit the controversial Rosebank oilfield north-west of the Shetland Islands. Another high street bank, Lloyds, also provided finance but has since sold down the debt.

Eighty+ organizations, such as Global Witness, Greenpeace, and the Rainforest Action Network, have sent a letter to the CEOs of banks urging them to stop providing financial support to Ithaca and break their ties with the company.

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The UK government green-lighted the development of Rosebank in September of last year. This untapped field is considered to hold the equivalent of 500 million barrels of oil, which has the potential to emit 200 million tonnes of CO2 if fully burned.₂.

According to reports from the oil industry, Ithaca Energy is currently invested in six out of the ten top-producing fields in the North Sea. They are now investing a substantial amount in the development of Rosebank, with plans to begin production by 2026. It has been described by activists as a fossil fuel company focused solely on their current production, with no intentions of expanding into renewable energy production.

HSBC, Lloyds, and NatWest are part of the Net Zero Banking Alliance. As members, they must commit to reaching net zero greenhouse gas emissions from their loans and investments by 2050, or earlier. Furthermore, they have all made a public promise to discontinue direct financing for new oil and gas ventures.

Based on the Banking on Climate Chaos 2023 report, during the period of 2016-2022, Lloyds, HSBC, and NatWest each provided substantial financial support of $78m (£61m), $60m (£47.0m), and $78m (£61m) respectively to Ithaca.

Lloyds has reportedly sold off its debt agreements with Ithaca and does not have any current loans with the company.

On Wednesday, a letter was sent urging three banks, as well as nine others that have provided funding for Ithaca, to use their influence to halt the company’s development of Rosebank. If the company does not comply, the letter requests that the banks refrain from providing any additional financing. Furthermore, the letter calls for the adoption of a formal policy that mandates clients to have a transition plan in line with the Paris climate agreements.

The letter states that providing any future funding or advisory services to Ithaca Energy could potentially put your bank at risk, especially if the company decides to pursue the Rosebank field and other expansion projects. These risks may include damage to the bank’s reputation, potential legal and regulatory consequences, and possible impact on investor expectations.

Lauren MacDonald, a member of the Stop Rosebank movement, expressed concerns over banks continuing to fund the expansion of oil and gas in North Sea. Despite some banks claiming to no longer support new fossil fuel projects, they are investing billions in the minority owner of Rosebank, who currently shows no intention of reducing drilling operations.

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If the project is carried out, it will release a greater amount of CO2 into the atmosphere.₂ emissions than the 28 lowest-income countries produce in a year combined, while Ithaca rakes in hundreds of millions.

If these financial institutions are truly committed to their promises to address the effects of climate change, they must put an end to their deceptive marketing practices and refrain from supporting Ithaca until they stop funding the development of Rosebank.

The Guardian reached out to HSBC, Lloyds, and NatWest for a response.

Source: theguardian.com