Al Gore calls out bankers profiting from big oil

New York: Al Gore, the former US vice-president turned climate crusader, says Big Oil and the banks backing it still have huge financial incentives to stick with fossil fuels, even though their decision to do so is the leading cause of the climate crisis.

Bankers “are profiting hugely” from their role as lenders and advisers to fossil fuel companies, Gore said in an interview ahead of Climate Week, the annual gathering in New York of business and government leaders that occurs in conjunction with the United Nations General Assembly.

Just as it’s “a bit unrealistic to expect fossil fuel companies to solve this crisis for us when they’re incentivised to do otherwise,” the business case for banks is the same, he said.

But the climate crisis is “a fossil fuel crisis” and that means the world needs to find a way to slash greenhouse gas emissions without assuming the oil industry will help, Gore said.

The verdict comes as energy companies double down on their fossil fuel businesses and scale back ambitions for renewables, with Shell Plc standing out as the latest example.

In June, the company said it will devote an ever larger chunk of annual spending to oil and gas, a strategy that’s been dubbed “catastrophic” by climate activists but that coincided with a 10% bump in its share price.

And oil analysts are already suggesting that last week’s departure of BP Plc chief executive officer Bernard Looney, who had stood out among peers for his efforts to push the company toward a greener strategy, will be welcomed by BP investors.

Meanwhile with continued output cuts from Organization of Petroleum Exporting Countries+, the prospect of higher oil prices remains. Bloomberg Intelligence analysts said US$100-a-barrel Brent crude is now “on the horizon again”.

The development suggests that Big Oil – which has repeatedly been accused of failing to walk its transition talk – is now also losing interest in even talking the talk.

Meanwhile, banks aren’t providing stakeholders with the information they need to assess their carbon footprints, according to a recent study.

BloombergNEF estimates that for the world to have a chance of achieving net-zero emissions by mid-century, banks need to channel four times as much capital into renewable energy as they do into fossil fuels by the end of the decade. The latest estimate suggests that figure is closer to 0.8 to one.

The banks financing oil “are earning big profits from continuing what they’ve done for so long”, Gore said. “And yet they know they have to change.”

Executives from the world’s biggest banks and oil producers are among stakeholders heading to this year’s COP28 climate summit, which will be hosted by the United Arab Emirates and be presided over by Sultan Al Jaber, the chief executive officer of state-backed Abu Dhabi National Oil Co (Adnoc).

The setup has drawn fury from climate activists who point to Adnoc’s goal of ratcheting up capacity. The company, which is the UAE’s biggest oil producer, said it can raise production and cut emissions at the same time by investing in carbon capture technology that’s still being developed.

Gore said putting an oil executive from a petrostate in charge of climate talks represented a “dubious proposition, at best”.

A spokesperson for COP28 said tackling the climate crisis required unity and collective action. “We must all together, focus on bringing solutions to the table and deliver a successful COP28 for all,” the spokesperson said.

Gore was keen to underline that he thinks there are actually a few bright spots in the fight against global heating. The 75-year-old pointed to the findings in a report published by the firm he chairs, Generation Investment Management, which indicates that global emissions from electrical grids will soon “peak and begin to fall”.

“A cleaner electric grid is the key to the energy transition, the single most important requirement if the rest of the programme is to succeed,” it said.

The report also said the annual flow of investment funds into clean energy is now 70% larger than the flow into fossil fuels.

“However, the flows of capital are still not large enough overall, nor are they going everywhere they need to go,” it said.

Even so, “we don’t have time for climate despair”, Gore said. “The antidote to despair is action, and the world is now taking action.” Examples of that include the Biden administration’s landmark climate bill, known as the Inflation Reduction Act (IRA), according to Gore.

“We’ve been understating the impact” of the IRA, he said. That’s on top of huge investments in green technology taking place in Europe and China. — Bloomberg