New Mexico Governor Vetoes Tax Break for Wells After Pushback

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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Proposal to Drill Oil and Gas Near Superfund Site Raises Alarm 

Oil and gas giant Civitas is proposing a 166-well oil and gas project in suburban Denver underneath a Superfund site — raising concerns among regulators that it could cause carcinogenic chemicals to leak into the groundwater. A leak could contaminate an aquifer relied on by millions of Coloradans, according to a letter from the Environmental Protection Agency. 

“The EPA is concerned that hydraulic fracturing surrounding and underneath the site could lead to a significant unintended release of hazardous substances,” the agency wrote in May to Dan Harrington, who leads Civitas’ development initiatives, reports The Slick’s Jennifer Oldham.

After Pushback, Tax Break for Wells Vetoed by New Mexico Governor

A tax break for operators of low-producing stripper wells in New Mexico was vetoed by Gov. Michelle Lujan Grisham in the wake of a Capital & Main story and a letter from a coalition of 29 groups asking her to spike the tax break. It was the capstone to a legislative session marked by the absence of any new oil and gas reforms — such as tax increases or new regulations. Some bills — such as proposals to limit the use of fresh water, impose fines for spills and create buffers around schools — weren’t even heard. 

“The one word that describes the Legislature for me is ‘frustrating,’” Rep. Matthew McQueen, a Democrat, told The Slick’s Jerry Redfern.

California Delays Plan to Extend Rewards for Oil and Gas Companies in Wake of Criticism

California has steered billions of dollars to oil and gas companies that produce fuels made from “renewable” sources via a pollution-trading market. State regulators were on the verge of extending the program’s rules but delayed the plan in the wake of intense opposition from critics. The dispute highlights a fierce debate over climate policy and whether public funds intended to reduce greenhouse gas emissions should go toward fossil fuel producers, reports The Slick’s Aaron Cantú.

As Banks Pull Away From Fossil Fuels, Private Credit Deals Fill the Gap

As more banks pull back from financing fossil fuel production, private credit managers are stepping in to fill the gap, demonstrating that oil, gas and coal assets are shifting to more opaque corners of the market. Private credit deals in the oil and gas industry topped $9 billion in 2022 and 2023 — a steep increase from $450 million in the preceding two years, according to data from alternative investment analytics firm Preqin. 

The trend is especially strong in Europe, where tough climate regulations have pushed many banks, including BNP Paribas and ING Group, to pull back on fossil-fuel loans. The development has made it more difficult to assess climate risk because these asset owners “aren’t subject to the same disclosure requirements as banks,” reports Bloomberg.

Canadian Government ‘Failing Litmus Test’ When It Comes to Slowing Subsidies to Oil and Gas Companies, Per Analysis

Despite Canadian measures intended to limit some subsidies for the oil and gas industry, the government is still offering billions to fossil fuel producers, according to a report by the group Environmental Defence. Per the analysis, Ottawa provided at least $18.6 billion in support to the fossil fuel and petrochemical industries in 2023. Among the projects partially subsidized by the government: $8 billion in loan guarantees for the Trans Mountain pipeline and $7.3 billion in public financing through the public authority Export Development Canada. 

“This is kind of the litmus test of whether the government is actually taking serious action,” Julia Levin, an associate director at Environmental Defence, told the CBC. “It’s failing that litmus test by continuing to give federal subsidies.”

Banks Pushed to Publish Ratios That Compare Green and Fossil Fuel Financing

Climate groups and investors are pressuring the world’s largest banks to disclose the ratios of how much they spend on renewable energy compared to their investments in fossil fuels. Reclaim Finance, BankTrack and Beyond Fossil Fuels are demanding that banks set a target ratio of 6-to-1 — so that for every $1 they spend on fossil fuels, they spend $6 on renewable energy sources by 2030.

“Committing to a finance ratio in favour of sustainable power is the best way for banks to demonstrate that their professed support for the energy transition is credible,” Beyond Fossil Fuels campaigner Brigitte Alarcon told The Banker.

Citi and JPMorgan Agree to Disclose Ratios of Fuel Financing

Some banks are giving in to pressure to disclose the ratios of their green and fossil fuel financing. After New York City Comptroller Brad Lander and three of the city’s big pension funds filed shareholder resolutions at six major banks, asking them for such data, Citigroup and JPMorgan Chase agreed to disclose the numbers. At the end of 2022, the ratio of low-carbon investments to fossil fuels was 0.73-to-1 but needs to increase to 4-to-1 by 2030 in order to meet the goals of the Paris Agreement, per research from BloombergNEF.

Despite Climate Commitments, Biden Administration Votes to Finance Oil Project in Bahrain

Despite a Biden administration order for government agencies to stop financing overseas carbon-intensive projects, as well as a recent international pledge to transition away from fossil fuels, the Export-Import Bank of the United States recently voted to help finance an oil and gas project in Bahrain. Six members of Congress, including Sen. Jeff Merkley (D-Oregon), had urged the bank not to provide the $500 million in financing, but to no avail. In February, two of the bank’s climate advisers resigned in protest when the financing plans were announced. The bank, the official export credit agency of the U.S. government, is also considering whether to finance a natural gas export project in Papua New Guinea and an offshore pipeline in Guyana, reports The New York Times.

Trump Administration Would Redirect Federal Aid Agency to Boost Fossil Fuels

According to a plan developed by allies of former President Trump, the U.S. Agency for International Development’s priorities would be shifted from helping poor countries deal with the impact of climate change to promoting coal, oil and gas in a second Trump term. In addition, the Heritage Foundation’s Project 2025 proposes halting the agency’s work to support public health and gender equity. 

“USAID should cease its war on fossil fuels in the developing world and support the responsible management of oil and gas reserves as the quickest way to end wrenching poverty and the need for open-ended foreign aid,” it said.

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