Deutsche Bank / Coal finance / Green Climate Fund (GCF)

Deutsche Bank Special: Deutsche Bank is still funding climate change

Dacota Access Pipeline

Protest at Standing Rock. Photo: Rob Wilson Photography

Deutsche Bank has been accredited as an implementing entity of the Green Climate Fund (GCF) since July 2015. NGOs criticized its inclusion as sending the wrong signal, since Deutsche Bank is one of the world’s largest financiers of the coal industry and thus undermining climate finance. And the GCF approved its first climate project in October 2016.  In a series of blog posts in cooperation with the environmental and human rights organization urgewald, provides insights into Deutsche Bank’s current coal and fossil fuel financing activities.

Resistance against oil pipelines and tar sand oil

Last year, the staunch resistance of the Standing Rock Sioux against the Dakota Access Pipeline fascinated and inspired the world. The Native Americans organized a blockade camp against its construction and were joined there by numerous activists. The resistance was sparked by the fact that the pipeline crosses land that the Standing Rock Sioux consider sacred and impacts unresolved land rights issues. The tribe also fears drinking water pollution on a massive scale should a pipeline accident occur. Furthermore, the Standing Rock Sioux were merely informed that the pipeline would be built, but not asked for their consent. More than 300 Native American tribes supported the protest, sending an important signal in the struggle for indigenous rights.

The resistance was successful in that the construction was halted – under the Obama administration – and further investigations ordered. Then Trump came to power and ordered the resumption of work on both Dakota Access and the equally controversial Keystone XL pipeline as one of his first official acts. While Deutsche Bank is not involved in the construction of the pipeline with a direct loan (unlike BayernLB), it is financing companies behind the pipeline (Energy Transfer Partners, Energy Transfer Equity and Sunoco Logistics).

Keystone XL, which is intended to transport oil from the Canadian tar sands to the United States, was a crystallization point for the more recent American environmental movement due to the climate impact of this particularly dirty oil: extracting it destroys entire landscapes, and considerable amounts of energy are needed to refine the oil. The processing requirements and costs associated with its production make tar sand oil uncompetitive when oil prices are low. This is currently an existential question for tar sand companies: since last year, multinationals such as ExxonMobil, Statoil, ConocoPhillips and Shell have been writing off their Canadian tar sand investments or withdrawing from the sector. It remains to be seen whether the specialized companies still active will succeed in extracting and shipping the oil. In addition to Dakota Access and Keystone XL, the Trans Mountain, Northern Gateway and Line 3 pipelines are also planned. Since they all affect indigenous land, more than 120 First Nations and tribes have reached an agreement to resist the planned pipelines, oil trains and tankers, as they threaten to violate indigenous rights, jeopardize the local economy and threaten the water supply.

In May and June, environmental and indigenous organizations contacted the banks that had previously funded companies behind Keystone XL (TransCanada) and Trans Mountain (Kinder Morgan), warning them not to provide additional financing to the companies, as it would go toward the construction of the controversial pipelines. Deutsche Bank also received both letters. Finance databases show that Deutsche Bank was not involved in a subsequent loan to Kinder Morgan in connection with the Trans Mountain pipeline. While this is a good sign, the bank does not have a clear policy that raises questions about or rules out this kind of financing.

Banking on climate change

This is also shown by a recent review of banks and climate protection, “Banking on Climate Change”, a joint publication of the Rainforest Action Network, Banktrack, Sierra Club und Oil Change International. In addition to banks’ activities related to the coal sector, it focuses on liquefied natural gas exports and “extreme oil”: tar sands, deep-water drilling as with the Deepwater Horizon, as well as Arctic oil.

The report has compared the policies and financing of 37 international banks, examining their support for 61 oil companies, 30 leading coal-based energy suppliers, 40 coal mining and 21 liquefied natural gas companies from 2014 to 2016.  The total funding by the 37 banks for the companies surveyed was $92 billion in 2014, rising to $111 billion in 2015 and dropping to $87 billion in 2016. If this is a trend, it is heading in the right direction. The total is still far too high, however, and these funds are going toward sectors that need to stop their fossil activities rather than expanding them.

In total financing volume, Deutsche Bank is in eleventh place with its $11.5 billion in 2014-2016, coming in behind four Chinese banks as well as American, British and one Canadian bank (the bank in first place being the worst climate offender, 37th place the least bad). In terms of policy, Deutsche Bank has improved in the field of coal and coal-based energy suppliers, but it is in a poor position with regard to extreme oil and liquefied natural gas. In all fairness, nearly all of the banks studied are bad in these areas, yet some are slightly better than Deutsche Bank. The decisive factor is, in any case, the types of financing that the banks’ policies still permit. With regard to financing tar sands, Deutsche Bank is ranked 13th behind predominantly U.S., Canadian and British banks.

While the bank has moved to rule out at least the direct financing of coal plants and mines, it still has work to do regarding tar sands, a fuel of great relevance to the climate.

Guest post by Regine Richter, urgewald