April 21, 2024

This story was produced by The Bureau of Investigative Journalism and become with Grist.

Santander exploited loopholes in its own climate policy to help raise billions for facilities that rely on fracked US gas. The bank then quietly watered down the same policy, making it easier to directly fund fracking in the future, The Bureau of Investigative Journalism, or TBIJ, can reveal.

The financing was for projects related to liquefied natural gas, or LNG, terminals, large industrial plants that take gas — much of it from the region’s many fracking sites — and cool it into liquid form before loading it onto tankers to be shipped around the area. become world.

If all the Gulf Coast’s numerous LNG projects are completed, they will constitute a “carbon bomb” with associated annual emissions of more than a billion metric tons of CO2, more than that of Russia. Local residents complained about air pollution, dirty water and serious health risks to their families.

Last year, Santander was one of the banks involved in raising at least $28 billion for LNG terminals on the Texas and Louisiana coasts. His policy at the time prohibited the financing of projects involved in the expansion of oil and gas extraction through fracking. While the LNG projects did not directly involve fracking, they rely on fracked gas and form an essential part of the production and distribution process.

Earlier this year, Santander then changed its policy without publicly announcing it. A footnote was added to its “prohibited activities” section, stating that exceptions related to fracking “may be considered” subject to factors including energy security and local development.

The bank also backtracked on its recognition of the “fundamental” role of the Intergovernmental Panel on Climate Change, or IPCC, in international climate agreements such as the Paris Agreement. The IPCC is recognized as the world’s most authoritative scientific body on the causes and effects of climate change.

The news follows TBIJ’s revelations that Santander helped coordinate a billion-dollar bond to expand the operations of PetroPerú, a national oil company with a major pipeline that cuts through important wetlands supposedly protected by the bank’s climate policy.

Santander told TBIJ: “While we cannot comment on specific clients or transactions, all financing decisions are guided by a strict policy framework approved by our board. Our lending policies are regularly reviewed by the board to ensure that the bank can support clients and markets at different stages of transition and help stimulate the growth needed to enable the required investment.”

Quentin Aubineau, a policy analyst at financial campaign group BankTrack, described Santander’s policy as “highly problematic”. Its banned activities focus narrowly on gas extraction, he explained, but new LNG terminals – which the policy allows to fund – require an increase in extraction to make them economically viable.

“Even if these transactions did not breach Santander’s ESG [environmental, social, and governance] policy, they highlight Santander’s lack of ambition,” he said, adding that the exclusions for some unconventional oil and gas projects were “highly inadequate”.

Ulf Erlandsson, chief executive of the Anthropocene Fixed Income Institute think tank, said Santander’s lending operations appeared to be a “nominal breach” of its policy and cost the bank credibility.

He added that the bank’s practices had been “largely in collaboration with a number of other European institutions with far-reaching sustainability commitments” since Russia’s invasion of Ukraine, which he said “turned the table on energy in Europe.”

Problematic projects

LNG development on the Gulf Coast was spurred by the country’s boom in the mid-2000s, but activity has particularly picked up again in the wake of the Russian invasion, with the US moving to position itself as an alternative global source of gas. introduce. There are five terminals in operation, four more under construction, and seven more greenlit.

But the climate consequences are huge, and in January Joe Biden suspended the approval of any new projects.

As well as encouraging the expansion of fracking activity – a highly polluting process that contributes to global warming – the LNG facilities that Santander helped finance have also caused problems more locally.

The Calcasieu Pass LNG project in Louisiana, for example, which last year took out a $1 billion bond with banks including Santander, has been linked to near-constant gas flaring, excessive emissions and the risks of explosion. Venture Global LNG, which owns the plant, said it was not fully operational due to faulty power equipment.

Roishetta Ozane, who lives inland from Calcasieu Pass and is the Gulf fossil funding coordinator for Texas Campaign for the Environment, told TBIJ that doctors said local air and water pollution caused an increase in her 18-year-old epileptic son’s seizures cause.

“He goes fishing, but he can’t eat the fish,” she said. “Because I’m afraid if he gets too much mercury in his system, too much of the other pollution in the water, it’s going to make his attacks worse.”

Last year, Santander helped lead a $7.8 billion financing package for the Plaquemines LNG project in Louisiana, which is poised to become one of the largest fracked gas export terminals in the US

The terminal has already withdrawn millions of liters of water from the local municipal supply. Total greenhouse gas emissions from burning fracked gas from the terminal expansion would be equivalent to 42 coal plants, according to an analysis by the environmental group Sierra Club.

Members of the Carrizo/Comecrudo Tribe Protest Outside the White House Against Fossil Fuel Activities in Texas
Members of the Carrizo/Comecrudo tribe protest outside the White House against fossil fuel activities in Texas.
Allison Bailey / NurPhoto / Alamy

Santander was also part of a banking collective that lent $7 billion to Port Arthur LNG, a terminal being built in southeast Texas. Even bigger was the $12 billion package for the Rio Grande terminal near Texas’ border with Mexico, which also involved Santander. That project is served by pipelines that run near Garcia Pasture, the ancestral land of the Carrizo/Comecrudo tribe, which challenged the U.S. Federal Energy Regulatory Commission for not adequately measuring the LNG plant’s environmental impacts.

Santander told TBIJ it is “fully committed to supporting a just and safe green transition.” It added: “We are also setting clear emissions reduction targets across a range of high-emissions sectors.”

Sempra Infrastructure, the company behind Port Arthur, told TBIJ it is committed to providing “safe, reliable energy” and is exploring options to lower the carbon intensity of its LNG. It said that LNG “will continue to play a key role in both developed and emerging markets worldwide.”

TBIJ made several attempts to contact Venture Global, the owner of the Calcasieu Pass and Plaquemines projects, and Next Decade, which owns Rio Grande LNG, but the companies had not responded by the time of publication.

Aubineau said Santander and commercial banks in general should exclude from their financing policy not only companies that develop new oil and gas exploration and production, but also those companies that develop infrastructure that supports increased production.

Erlandsson said: “With controversy also domestically over US LNG terminals, to the extent that even the Biden administration has put a pause on further LNG terminal expansion, arguments that this type of financing causes material adverse effects cannot be dismissed .”

For Ozane and her community, the banks financing the LNG build-up on the Gulf Coast are deliberately putting profits over people: “While people of color and low-income communities are fighting for our lives on the front lines of climate change, these banks continue to finance the fossil fuel industries. They continue to target low-income, low-wealth Black, Indigenous and other people of color communities, treating us like collateral damage to corporate profiteering.”

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