Welcome to “Feet to the Fire: Big Oil and the Climate Crisis,” a biweekly newsletter in which we share our latest reporting on how the fossil fuel industry is driving climate change and influencing climate policy in five of the nation’s most important oil- and gas-producing states. In addition, we shine a spotlight on the financing of the fossil fuel industry, holding banks and other financial institutions accountable for their role and providing you with updates on their activities.

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New Mexico to Bankroll Plugging of Oil Wells for Company Dubbed ‘Poster Child’ for State Reforms

In an unprecedented settlement, the state of New Mexico came to an agreement with Ridgeway Arizona Oil Corp. to plug 299 of the company’s moribund, nonproducing oil wells, with the state paying the costs and the company reimbursing the state $30,000 per month until the bill is repaid. The repayment process could take more than 83 years. The company was the focus of a Capital & Main investigation last year into companies taking advantage of a state program allowing oil and gas producers to temporarily shut off wells due to the collapse of the fossil fuel market following global COVID-19 economic shutdowns. Instead of forcing companies to produce oil and gas at a loss during the pandemic — which would have the side effect of lowering state tax revenue — the Oil Conservation Division implemented an emergency rule allowing companies to shut down wells for up to three years without penalty.

Why Pittsburgh’s ‘Extreme Embrace’ of Fossil Fuel Lobbyists Threatens to Undermine Local Climate Goals

More than Houston or Baton Rouge or other cities where the oil industry dominates the economy, Pittsburgh is entangled in “the most extreme embrace” of fossil fuel lobbyists, according to a report from environmental research and advocacy organization F Minus. The report identified five powerful lobbying firms that represent oil and gas companies, as well as environmentally minded groups and city government — a dual loyalty that threatens to undermine local climate goals and the state’s progress on its greenhouse gas reduction goals, reports The Slick’s Audrey Carleton. “Fossil fuel companies have far more money and clout and gravity and so the magnets are always going to move in their direction,” said report author James Browning.

U.S. Banks Lag European Banks in Green Financing

American banks lag European banks when it comes to green financing — loans and bonds for environmentally friendly industries — largely due to a politically fueled backlash in some states against investment policies by some banks suspected favor renewables over fossil fuels. Overall the world’s largest banks made $3 billion from underwriting bonds and making loans in the sustainable category last year compared to $2.7 billion for the oil and gas industry. The backlash began in 2022 when the state of Texas accused BlackRock and nine European investment banks of boycotting the oil and gas industry. In response, BlackRock assured the state that it had $310 billion worth of investments in the oil and gas industry. Either way, the momentum is not quite there yet — four times as much capital (investments, loans, bonds, etc.) needs to be allocated to green projects compared to fossil fuels by 2030 to align with net zero emissions targets, according to an analysis by BloombergNEF. Yet at the end of 2022, that ratio was just 0.7 to 1, largely unchanged from the previous year. “Banks still aren’t keeping pace with the rate of transition that’s required to avoid catastrophic climate change,” Jason Schwartz, senior communications strategist at Sunrise Project, a nonprofit focused on the financial sector’s contribution to global warming, told BloombergBNN.

Canada’s Big Banks Accused of Misleading Investors When It Comes to ‘Sustainable Finance’

Canada’s big five banks were accused of misleading investors by using terms such as  “sustainable finance” without supporting their claims with actual data, according to climate advocacy group Paris Compliance, which filed a complaint with securities regulators last  week. The banks — RBC, TD, BMO, CIBC and Scotiabank — have made pledges on sustainable finance totalling $2 trillion by 2030. “They’re putting this in the window as one of their core responses to climate change and net zero, when they’re not rationalizing or justifying or providing any evidence or proof about that,” Matt Price, executive director of the group, told the CBC. As an example, Paris Compliance noted that TD Bank served as a co-sustainability structuring agent for a U.S. $4 billion sustainability-linked loan with Occidental Petroleum, an oil company which is spending $12 billion to buy shale driller CrownRock. The banks did not respond to the CBC’s requests for comment.

ING is First Major Bank to End Financing for Blast Furnace Steel Projects

Global banking giant ING took a big step recently as the first major bank to stop financing new unabated steel blast furnaces, new metallurgical coal mines or the expansion of such existing furnaces and mines. The steel sector has long been in the crosshairs of climate activists since it is one of the biggest industrial sources of CO2 emissions. The news was welcomed by environmental groups such as BankTrack, which urged ING to go further by ending “corporate finance and bond facilitation services for companies developing steel infrastructure that depends on metallurgical coal, and companies that have metallurgical coal mining expansion plans.”

Giant Banks Behind Merger that Created the Country’s Largest Natural Gas Producer

Chesapeake Energy and Southwestern Energy merged last week in an agreement valued at $7.4 billion or $6.69 per share — creating one of the country’s largest natural gas producers. The deal will almost certainly face scrutiny as mergers and acquisitions  continue in the energy industry. The giant, which will soon have a new name, aims to expand production and gain “access to premium markets to supply growing global natural gas demand.” Major financial institutions involved in the deal include lead financial adviser Goldman Sachs and JPMorgan Securities LLC as financial adviser — though both banks have made commitments to help transition their financing from fossil fuels to renewables in the coming decades.

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