The world’s major banks have traditionally been accommodating towards
companies in the oil, coal, and gas industries to finance new projects. However, in recent years, banks have started to show a bigger interest in companies that operate in renewable energy. This year, a majority of energy investments have gone to green energy companies.
According to a report by Bloomberg Green, the banks have so far this year helped renewable energy companies with loans and bonds worth $ 203.6 billion dollars. The corresponding figure for companies in the fossil fuel sector is $ 189.2 billion. This manifests a shift compared to last year, when banks financed the fossil fuel industry with $ 687.6 billion, while companies in the renewable sector received $ 323.4 billion.
If we go even further back in time, the difference becomes even clearer. In 2014, for example, banks invested $ 862.3 billion in the fossil fuel industry, while renewable energy companies received only $ 47.9 billion in funding. It looks like the shift in funding is a trend. It may be in part due to the fact that the pandemic has temporarily reduced the need for fossil fuels.
But another and probably more important reason is that the banks now gets more bang for the buck by financing renewable energy. According to Bloomberg Green, banks now earn an average of 0.06 percent more on financing renewable energy than fossil fuels.
Another sign that points towards fossils taking the backseat is that JP Morgan is now investing heavily in renewable energy. Looking back, in 2015
JP Morgan was the single largest financier of the fossil fuel industry. As recently as last year, by far the largest part of the bank’s energy financing also went to the fossil fuel industry. But this year, JP Morgan is instead the single biggest financier of renewable energy.
Picture: Unsplash.
