Seldom does a bank speak so clearly on the urgent need to act on climate change and end fossil fuel expansion. And indeed, the announcement of ING was not the first time it stepped ahead of its peers in making new climate commitments. But is the bank really taking decisive steps to help end the further expansion of oil and gas production? Sadly not, as two massive loopholes remain that raise serious doubts on the sincerity of the bank's stated commitment.

Loophole 1: Corporate finance

While ING has now decided to no longer provide dedicated finance to new oil and gas projects, it so far places no restrictions on financing oil and gas companies that aim to dig and drill for new oil and gas reserves right until the world has crashed through every meaningful temperature target.

One such company is Australia based ‘energy pioneer’ Santos. The company’s website leaves it no secret that the pioneering spirit of the company is mostly focused on exploring new oil and gas reserves in every remote corner of Australia and of the world, for decades to come. It recently merged with, what's in a name, Oil Search, to become one of the top 20 largest companies on Australian Securities Exchange (ASX), aiming to produce even more oil and gas. 

One of the new projects Santos is currently developing is the Barossa gas project. This project is located 300 km offshore, north of the Tiwi islands, near Darwin, Australia, and will tap into a massive new gas field that will provide a new source for the already existing Darwin LNG terminal. The Barossa project is expected to produce more carbon dioxide than any gas currently made into LNG, this due to its very high level of carbon dioxide. The magnitude of the project brings huge risks of leakages, spills or explosions that in turn could lead to huge liabilities for Santos and its shareholders and financiers. 

Despite this, in August this year, ING participated with 23 other banks in a US$ 1.25 billion loan facility to the company. Then in September, an Australian court ruled that Santos had failed to consult the Tiwi Island’s Traditional Owners of the project area and violated their right to Free Prior and Informed Consent (FPIC). The court revoked Santos’ drilling permit and ordered the field to be vacated within two weeks. One wonders what ING needs to learn more about Santos before it decides to cut all ties with this client.

Loophole 2:  Midstream oil and gas

The second major loophole in ING’s ‘no new oil and gas commitment’ is that it only covers upstream operations; the actual exploration and exploitation of fields. Nothing in its current policies prevents ING from financing midstream oil and gas projects and companies, basically everything required to bring oil and gas from source to market, from pipelines to refineries to LNG terminals to ship tankers and railroads. Research by BankTrack indicates that this was in fact already the majority of oil and gas financing by ING before it adopted its exclusion policy for upstream projects.

When it announced this new policy, ING emphasised that it will keep ‘financing clients active in keeping oil and gas flowing, in line with efforts to keep energy affordable during the low-carbon transition’. However, while it may be necessary to maintain existing oil and gas infrastructure for a number of years while the world transitions away from fossil fuels towards renewables, logic dictates that ending the further expansion of oil and gas production also removes the need for any further expansion of midstream activities. The opposite also holds true; continued investments in expanding midstream activities leads to a further lock in of future fossil fuel production and consumption for the next 30 to 40 years, completely out of line with all net zero climate scenarios.

Even the current tragic geopolitical situation caused by Putin’s invasion of Ukraine, which makes countries scramble to reduce their reliance on Russian oil and gas, provides no justification for any further expansion of LNG capacity, either in Europe or in the United states. A recent assessment by IISD states that “there is no room for new fossil import infrastructure in Europe in 1.5°C-aligned gas phase-out pathways. Existing import capacity can meet the gas demand for Europe in the medium- and longer-term. In 2022 and 2023, the short-term supply crunch and its potentially dire consequences cannot be alleviated in time by newly added gas capacity."

Apparently, ING did not get the memo, or rather, has chosen to ignore it. Recent research by BankTrack and Dutch data journalism platform Pointer shows that since the 2015 Paris climate agreement, ING has become the 3d largest financier of LNG terminals in the US. The bank provided over US$ 7 billion in project finance for seven existing terminals and for two that are currently under construction. Just this year, ING provided US$ 206 million to the Corpus Christi LNG Phase 3 Expansion project, and US$ 957 million to the Plaquemines LNG terminal. ING has also financed the companies behind the current LNG boom. For example, it provided US$ 180 million and US$ 430 million respectively to Cheniere and Venture Global, which run the Corpus Christi and Plaquemines terminals.

These LNG terminals are being built in the Mississippi delta, an ecologically sensitive area of wetlands in Louisiana, where communities are already experiencing disastrous pollution levels and coastline erosion losses, a situation captured this week in a documentary of Pointer on Dutch TV.

Watch the documentary of Pointer on ING finance for LNG in Louisiana (in Dutch).

Given the extensive links between ING and the midstream oil and gas industry, it is highly concerning that ING's climate commitments do not extend to this part of the oil and gas industry.

Stop financing expansion

With two such major loopholes still in place, ING cannot seriously claim that it aims to bring an end to the further expansion of oil and gas production, let alone that it is truly supporting its oil and gas clients to transition into a future which will no longer require their primary fossil fuel product but offers massive opportunities for renewable energy production. ING seems trapped in its often repeated mantra that ‘the world needs oil and gas for decades to come’, wrongly concluding from this that therefore the bank itself should be financing oil and gas companies for decades to come. This explains why ING’s climate report, on page 54, states that ING only aims to reduce its exposure to upstream oil and gas by 19% in 2030, whereas production and consumption of oil and gas needs to be reduced with at least 30% by 2030 to be Paris-aligned. ING even projects that by 2050, when the world is supposed to finally have reached ‘net’ zero, the bank’s upstream oil and gas portfolio will still be 31% of what it was in 2019, an astonishing commitment to what by then will surely be the most vilified business sector in the world. And to make matters worse, all of these targets are only applied to ING’s lending portfolio. Underwriting of bond and share issuances, which accounts for around 50% of all bank financing for the fossil fuel industry, is not covered by ING’s climate targets.

ING could make different choices. Its oil and gas portfolio, while significant, forms only a small portion of its total loan book. It would take courage for the bank to declare to its clients and its shareholders that it plans to disentangle itself from the oil and gas sector altogether, starting with all companies still expanding, and from now on throw its full weight behind financing renewable energy alone. It did so already for the coal sector in 2017, on the ground that “contributing to the Paris Agreement targets is also about making clear choices in what we’ll no longer finance, especially when there are good alternatives available”. Such a bold move would fit a Dutch bank that otherwise runs a very real risk of seeing its business, literally, drown. ING talked the right talk, now it should start to walk the difficult walk.