Barclays pulls upstream gas expansion project financing

Barclays is to stop project or other direct finance to energy clients for upstream oil and gas expansion projects or related infrastructure under its revised Climate Change Statement.

Alongside restrictions for new energy clients engaged in expansion, Barclays is imposing restrictions on unconventional oil and gas; introducing requirements for energy clients to have 2030 methane reduction targets, a commitment to end all routine / non-essential venting and flaring by 2030, and near-term net zero aligned Scope 1 and 2 targets by January 2026; and expectation for energy clients to produce transition plans or decarbonisation strategies by January 2025.

From June 30, it will not finance energy group whose shared aggregate share of production in Oil Sands, Extra Heavy Oil, Hydraulic Fracking in the UK/EU, and Arctic Circle, exceeds 20% of their total oil and gas production, nor will it fund clients engaged in exploration, appraisal, development and production of oil and gas in the Amazon Biome.

By 1 January 2030, for EU and OECD, it will phase out financing to all clients engaged in thermal coal mining.

The measures follow Barclays’ commitment to finance $1trn of sustainable and transition finance by 2030.

Laura Barlow, Group Head of Sustainability, said addressing climate change is a critical and complex challenge.

She said, “We continue to work with our energy clients as they decarbonise and support their efforts to transition in a manner that is just, orderly and addresses energy security. Today we strengthen our commitment to the energy transition, with policies that will focus our capital and resources to the energy companies that play a key role in the transition.”

Daniel Hanna, Head of Sustainable Finance, Corporate and Investment Bank, added that capital is critical to the energy transition, to decarbonise hard-to-abate sectors for the world to reach Net Zero emissions and create a resilient economy.

He said, “As the number two ranked clean energy advisor globally by BloombergNEF (BNEF), Barclays is strongly positioned with our capabilities and experience, global reach and role in the global economy to accelerate the investment needed for real-world decarbonisation, while supporting our energy clients’ transition.

“Publishing our Transition Finance Framework reinforces our commitment to be transparent in how we are mobilising $1 trillion of Sustainable and Transition Finance by the end of 2030 while Barclays continues to be a leading global clean energy adviser and financier, unlocking growth from the energy transition.”

In the International Energy Agency NZE scenario, new long lead time upstream oil and gas projects are not required on a 1.5°C-aligned pathway.

Barclays said it will continue to support an energy sector in transition, focusing on the diversified energy companies investing in low carbon and with “greater scrutiny” on those engaged in developing new oil and gas projects.

Global investment in the low-carbon energy transition surged 17% in 2023, reaching $1.77trn, according to the recently published Energy Transition Investment Trends 2024 from BNEF.

It forecasts that energy transition investment would need to average $4.8trn per year from 2024 to 2030 to align with BNEF’s Net Zero Scenario, a Paris Agreement-aligned trajectory from the 2022 New Energy Outlook, nearly three times last year’s total investment.

While last year saw strong growth in emerging areas such as hydrogen (with investment tripling year on year), carbon capture and storage (near-doubling) and energy storage (up 76%), electrified transport is the largest sector for spending in the energy transition, growing 36% in 2023 to $634bn.

The largest country for investment by far was China, with $676bn invested in 2023 – equivalent to 38% of the global total.

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