Stop Financing Natural Gas Production

Tell Bank of America to stop financing natural gas production. Bank of America has been identified as one of the top four financial institutions responsible for financing $1.9 trillion of fossil fuel projects between 2016 and 2018 (Rainforest Action Network 2019). Lending practices related to natural gas exploration, production, and infrastructure exacerbate the climate crisis and expose investors to undue risk as those loans may be subject to premature write-downs for the following reasons:

  • Major fossil fuel companies have cut their commodity price forecasts resulting in the revaluation of shale assets. In many cases, the revised values will be insufficient to repay debt in the event of bankruptcy (Matthews and Elliot 2019, Matthews, Olson, and Prang 2019).
  • Credit to shale drilling projects is expected to tighten by 10%, which may force many operators into insolvency (Matthews, Olson, and Prang 2019).
  • Research suggests that “by 2035, over 90 percent of proposed combined-cycle gas plants, if built, would be uneconomic to run compared to the cost of building a new clean energy portfolio" (Dyson 2019).
  • Clean energy portfolios consisting of wind, solar, battery storage, and demand response are already less expensive than some gas-fired generation facilities (Dyson 2019).
  • These market forces will also impact transportation infrastructure, such as pipelines, and could lead to more than $70 billion in stranded natural gas assets with low probabilities of achieving projected future cash flows and high probabilities of loan write-downs (Dyson 2019).
  • Expected policy changes needed to address climate change are expected to reduce the market capitalizations of upstream energy producers by 37.7% (Principles for Responsible Investment 2019).

 

Harvey, Chelsea. 2019. “CO2 Emission Will Break Another Record in 2019.” Scientific American, December 4.

Amos, Jonathan, 2019. “Climate Change: Greenland Ice Melt ‘Is Accelerating.’” BBC, December 10.

Rainforest Action Network. 2019. Banking on Climate Change: Fossil Fuel Finance Report Card.

Matthews, Christopher M., and Rebecca Elliott. 2019. “Chevron, Facing Fossil Fuels Glut, Takes $10 Billion Charge.” Wall Street Journal, December 10.

Matthews, Christopher M., Bradley Olson, and Allison Prang. 2019. “Banks Get Tough on Shale Loans as Fracking Forecasts Flop.” Wall Street Journal, December 23.

Dyson, Mark. 2019. “A Bridge Backward? The Risky Economics of New Natural Gas Infrastructure in the United States.” Rocky Mountain Institute, September 9.

Principles for Responsible Investment. 2019. Impacts of the Inevitable Policy Response on Equity Markets.

Bank of America. 2020. “A Global Company with a Local Focus.” Who We Are.