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As Colorado Races to Set New Rules for Climate-Friendly Industries, Its Plan Raises Concerns Over Dual Role of State Regulator

Coal is back, despite banks’ pledge to stop financing such projects.

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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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As the climate crisis gains urgency, more companies are launching climate-friendly energy solutions, such as carbon capture and geothermal projects, which remain largely unregulated. Colorado is racing to be among the first states in the country to set up new rules for the industry, but its approach is raising concerns. The state has proposed using the same agency that regulates fossil fuel production to oversee these new industries as well. But both the oil and gas industry and environmentalists worry that the new Colorado Energy & Carbon Management Commission won’t be able to handle both roles effectively. “The enthusiasm to scale all this stuff up as quickly as possible is getting ahead of how we do it carefully and smartly and protect people,” Jacob Smith, executive director of Colorado Communities for Climate Action, told The Slick’s Jennifer Oldham. 

Though it’s the most polluting fossil fuel, coal has seen its production and use increase in the U.S. and Europe in recent years. And some of that production is happening with financing from major banks, such as JPMorgan Chase & Co. and Citibank, despite their net-zero commitments and pledges to stop financing fossil fuel projects. That’s because  major loopholes in those commitments allow them to make general purpose loans to fossil fuel companies to keep financing coal-fired power plants. Six global banks  have plowed almost $84 billion since 2016 into 10 parent companies that operate coal plants, as reported in this story.

U.S. Still Spends Big to Finance Overseas Oil and Gas Production Despite Biden Pledge

Despite President Joe Biden’s 2021 pledge at the COP26 U.N. Climate Change Conference to stop funding “unabated fossil fuel energy” overseas by 2022, the U.S. approved more money for international fossil fuel projects in 2023. That included the U.S. Export-Import Bank’s funding of the following projects.

The bank is also considering funding an LNG project in Papua New Guinea and oil and gas production projects in Bahrain and Guyana. “Despite lofty promises and international agreements, Biden continues to approve projects that exacerbate our climate crisis and threaten communities,” said Collin Rees, U.S. program manager at Oil Change International. 

New World Bank President Aims to Push More Subsidies Away From Oil and Gas Projects

One of the major sources of financing for fossil fuel projects around the world comes in the form of government subsidies — such as tax breaks, low-interest loans and price caps on gasoline — that totaled $7 trillion last year, according to the International Monetary Fund. The new president of the World Bank seeks to change that dynamic, criticizing the amount spent on such subsidies in a speech at the institution’s annual meeting in Morocco. The bank wants to prioritize spending on climate change action over money to make fossil fuel, fisheries and agriculture more affordable. In his remarks, Ajay Banga said the following.

“Every year $1.25 trillion are spent on subsidies for fossil fuels, agriculture, and fisheries. Some of these are very important and needed, but in other cases we can do better.

“The economic costs of fertilizer runoff, unnecessary air pollution, and overfishing is $6 trillion — every — single — year.

“By repurposing some of this money to incentivize sustainable practices — we can protect, air, water, and forests — while continuing to support those most in need.”

‘Most People Can’t Afford an EV’: Tension Builds Between Global South and Development Banks 

Tension is building between countries in the Global South, which are eager to develop their oil and gas resources, and international development banks that are increasingly reluctant to finance such projects. The World Bank announced in 2017 that it would stop financing upstream fossil fuel projects, and that position has been adopted by other development banks, including the Asian Infrastructure Investment Bank. “There’s definitely a tension,” Amaka Anku, practice head for Africa at the Eurasia Group, told Global Markets. “It’s harder in some instances for [African] countries to raise money to develop oil and gas assets. If you look at Nigeria — the biggest economy and market — it’s going to be using fossil fuel for the next 50 years. Over 60% of the population is poor, [and] most people can’t afford an EV.”

How Big Oil Plans to Survive Its Underinvestment Crisis

The oil and gas industry is increasingly concerned about chronic underinvestment amid concern over the climate crisis. Amy Miller, CEO of The Energy Council, said the inability to finance such projects has become the industry’s Achilles’ heel. Yet she holds out hope for three potential lifesavers: more funding from the Middle East and Asia, creative solutions and linking projects to energy transition goals, she told Petroleum Economist.

Climate Change is the Biggest Reason Investors Dump Stocks

Concern over climate change is the No. 1 reason institutional investors dump stocks and exclude oil and gas companies from their portfolios, according to a newly released “exclusions tracker.” About 40% of investors cited climate issues as the reason they dropped a particular stock, according to the Financial Exclusions Tracker, which was launched recently by several nonprofits. The companies most excluded were Canada’s Cenovus Energy Inc. and Suncor; China Energy Engineering Corp.; Exxon Mobil Corp.; and Shandong Energy Group Co. Ltd.


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