National Australia Bank to cap loans to oil and gas companies

By Alice Uribe

SYDNEY – The National Australia Bank Ltd. issued a new policy to cap loans to the oil and gas sector, but said it would directly fund gas extraction in Australia, where it “plays a role in supporting national energy security.”

Following a review this year, NAB said it had limited oil and gas exposure at US $ 2.4 billion and would reduce its exposure from 2026 to 2050.

This, the NAB said, is aligned with the International Energy Agency’s 2050 net zero emissions scenario, which outlines a path to limit temperature rise to 1.5 degrees Celsius by 2050. C he is the first Australian lender to issue an oil and gas loan policy.

NAB chief executive Ross McEwan said the lender was making sure it was able to help its clients with the transition.

“I think this is going to be vital for Australia but also for the world. Banks like us need to help customers make the transition, which will involve lending in these sectors to help them do that,” he said. he said during a media call.

For fiscal year 2021, NAB loans for oil and gas extraction amounted to A $ 2.9 billion (US $ 2.15 billion).

As part of the new policy, NAB has said it will not consider directly funding natural gas extraction in Australia, where it plays a role in supporting national energy security.

Mr McEwan said it would likely be a “rare exception”.

“We expect us to help where there is in the national interest, both in a state or in a federal area, where investments in gas are needed,” he said.

“But we expect this to be very minimal, if at all, but we have said that we will be there to help with the domestic supply.”

Following the review of its oil and gas-related exposures, NAB also said it will not directly fund new gas extraction projects outside of Australia, but will continue to support integrated liquefied natural gas in Australia, New Zealand and Papua New Guinea, and selected LNG infrastructure in other regions, under the oil and gas exposure ceiling.

The NAB said it would not directly fund new oil extraction projects or boarding new customers with a predominant focus on oil extraction, and that it would not fund extraction projects, production or pipeline of oil and gas within or impacting the Arctic National Wildlife Refuge. zone or other similar Antarctic refuge.

Finally, the NAB said it would not directly fund projects to extract oil and gas in ultra-deep water.

The Climate Action Group Market Forces said it believed the material impact of the new policy on NAB lending for new fossil fuel developments was unclear, and questioned the application of the policy to “direct financing”, whereby banks finance a project rather than its owners.

This updated lending policy for companies and institutions working in a number of carbon-intensive sectors follows NAB’s 2019 review of its thermal coal-related exposures, where it said it will not finance new or physical expansion of coal-fired power generation facilities.

In 2019, NAB signed the United Nations Environment Program Finance Initiative’s collective commitment to climate action, committing it to scale its business operations and loan portfolio to zero net ‘by 2050.

The lender on Tuesday reaffirmed its previous announcement that it would set and publish decarbonization targets for its entire loan portfolio in its 2022 annual report suite.

Write to Alice Uribe at [email protected]

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