Reclaim Finance and Banktrack have published a report regarding banks and investors that are financing the largest LNG developers and their new terminals and the climate consequences of the LNG boom.
According to the new report, the 156 new export and import terminals planned by 2030 are poised to bridge borders by connecting export markets with import markets. New LNG export development primarily takes place in Canada, Mexico, and the US, which account together for over 50% of new export capacity. However, Reclaim Finance states that transporting gas in its liquefied form instead of through pipelines comes with climate consequences. It increases the risk of methane leaks, a serious concern given that methane is, on average, 80 times more potent as a greenhouse gas than CO2 over a 20-year period.
These emissions could offset climate benefits of fossil gas compared to coal. Since new LNG facilities are designed to operate for several decades, with a lifespan that can extend beyond 40 years, the 63 planned export terminal projects will contribute to the release of over 10 Gt of CO2 in the next five years. This includes more than 150 million tonnes of methane leaks by 2030 and represents more than two years of US energy sector emissions using 2022 to 2023 totals. These climate impacts can be further compared to the annual emissions of all the coal plants in operation worldwide, which amount to 12 Gt of CO2, according to the report.
Furthermore, the support offered by banks to LNG expansion is intensifying despite consequences for the climate, communities, and ecosystems. The financing provided by all the banks analyzed in the report increased by 25% between 2021 and 2023.
Reclaim Finance urges banks to adopt comprehensive policies to:
- End all financial services, including advisory services and project financing, to new LNG facilities and the expansion of LNG facilities, especially export terminals. Priority should be placed on the exclusion of export terminals, the development of which directly contradicts all credible climate scenarios. Support to import terminals should also be phased out considering both the high probability of these becoming stranded assets and the hindrance their development presents to the energy transition.
- Exclude all corporate financing, mostly in the form of loans and bonds issuance, to LNG export developers that continue to develop new LNG export projects. This exclusion should be extended to LNG import developers that fail to waive their LNG expansion plans in the near future.
Reclaim Finance urges investors to adopt comprehensive policies that:
- Expect LNG developers in their portfolios to stop LNG expansion.
- Stop new investments in companies developing new LNG export terminals, and use existing holdings to engage and vote against strategic management-proposed items (for example, the re-election of directors, remuneration, and financial statements).
- Reclaim Finance urges banks and investors to require LNG import terminal developers to adopt transition plans based on a 1.5°C-aligned pathway with no or low overshoot, no new import terminals, and that relies on minimal negative emissions — such as the IEA’s NZE scenario.
