Avoiding dependence on LNG
Liquefied natural gas (LNG) has come center stage over the last years. Following the Russian invasion of Ukraine in February 2022 and the subsequent spike in gas prices, this fossil fuel has been presented by the oil and gas industry as the key solution to maintain gas supply while fulfilling the imperative of energy security. The LNG market is now poised for its largest wave of new supply by 2030. Global LNG supply is expected to expand by almost 50%. If these terminals are built, they will destroy any hope of limiting global temperature rise to 1.5°C. LNG is composed largely of methane, an extremely potent greenhouse gas—around 80 times more powerful than CO₂ over a 20-year timeframe—which is precisely the critical timeframe during which the world will reach or exceed 1.5°C if emissions do not fall rapidly.What’s more, LNG terminal projects have devastating consequences for nearby communities and ecosystems.
A significant number of planned LNG terminals could not spring up without the support provided by financial institutions. Banks and investors must immediately adopt robust exclusion policies to put an end to their financial support to LNG developers and new LNG projects.
LNG, a false solution with dire consequences
of carbon dioxide equivalent (CO2e) could be released by 2030 if the 63 planned export terminals are built.
By 2030, LNG developers are planning 156 new LNG terminal projects (93 import terminal projects and 63 export terminals projects) that threaten to lock the world into a fossil fuel future. If built, the 63 planned export terminal projects could contribute to the release of over 10 gigatonnes (Gt) of carbon dioxide equivalent (CO2e) by 2030, according to our analysis. This includes more than 150 million tonnes (Mt) of methane leaks by 2030. These climate impacts are slightly lower than those of all the coal plants in operation worldwide, which emit 12 Gt of CO2e annually.
This alarming figure is linked to the fact that LNG is fossil gas that has been cooled to about -162°C, condensing it into a liquid form. Fossil gas is extracted from gas fields, carried to export terminals where it is liquefied and loaded onto LNG carriers for transportation by sea to import terminals where it is regasified for consumption. The liquefaction process is highly energy intensive, consuming approximately 10% of the fossil gas that is processed. Other stages of the process also add to the LNG carbon footprint, with greenhouse gas emissions occurring during transportation, storage and regasification, and during end-use.
Another significant aspect of LNG processing is the high level of associated methane (CH4) emissions. LNG is composed of methane, a greenhouse gas over 80 times more powerful than CO2 over 20 years. Methane releases occur throughout the LNG value chain. Although LNG is often presented as an alternative to coal, these leaks negate the “climate benefits” of fossil gas promoted by the industry.
LNG expansion actively fuels fossil gas growth both upstream and downstream. Import terminals are often developed alongside new gas-fired power plants—for instance in Europe and in Thailand—while LNG export capacity drives new gas field development. Reclaim Finance has identified 46 short-term gas fields projects (under field evaluation or development) directly linked to LNG terminals, representing more than 51 billion barrels of oil equivalent of gas resources. LNG expansion is locking the energy sector into long‑term dependence on fossil gas.
However, the projected peak in gas demand by 2030 alongside renewable energy growth and electrification could render new oil and gas investments stranded assets in the near future. Recently built LNG terminals could become stranded in importing regions if climate goals are met, and in exporting countries such as Canada and Australia.
The human and environmental costs of LNG
LNG terminals damage livelihoods (e.g. fishing), strain water resources, and often violate communities and Indigenous rights. The promise of job creation locally often falls short. Health problems and pollution are also direct consequences of LNG expansion in neighboring communities.
LNG expansion also destroys biodiversity. Infrastructure and shipping traffic cause water, air, and noise pollution, threaten marine life, and destroy habitats through dredging, thermal pollution, and spills.
Banks and investors pour billions into LNG expansion
billion granted to LNG expansion by 400 banks worldwide between 2021 and 2023.
billion in exposure to the largest LNG developers for their LNG expansion by the 400 most exposed investors in May 2024.
According to Reclaim Finance analysis, the 400 biggest banks supporting LNG expansion provided US$213 billion to LNG developers and their new projects from 2021 to 2023. The 400 investors we assessed – by continuing to support LNG companies without requiring the end of fossil fuel expansion – hold accountability in the LNG boom through their US$252 billion in exposure to LNG expansion as of May 2024.
US banks are at the forefront, with responsibility for 24% of overall financing of LNG development (JP Morgan, Bank of America, and Citi appear in the top 10 banks). Japanese banks follow, contributing 14% of the total amount, with Mitsubishi UFJ Financial Group claiming the top spot, and Mizuho, and SMBC ranking among the top five global banks providing financing to LNG expansion between 2021 and 2023, followed by Chinese and Canadian banks.
Banks from France, Spain, the UK, Germany, Italy, the Netherlands and Switzerland collectively contributed 27% of overall financing to the recent LNG boom. Several European banks such as Santander, ING, Crédit Agricole, Deutsche Bank, HSBC, Intesa Sanpaolo, and BPCE are among the top 30 global banks which supported the most LNG expansion between 2021 and 2023.
In May 2024, US investors accounted for 71% of the total investment in LNG expansion, with BlackRock, Vanguard, and State Street leading the way. Canadian investors follow, but at a considerable distance, holding 6% of the total investor exposure.
The support of banks to LNG expansion is intensifying with an overall 25% increase of financing between 2021 and 2023. No less than 1,453 transactions were made between banks and LNG developers to support LNG expansion in 2023 alone, directly contradicting the NZE scenario and its clear, lasting statement that no new LNG export facilities are necessary.
And there is no sign that the support of banks and investors for the sector is going to dry up in the near future. In fact, although 26 out of the top 30 banks and 14 out of the 30 biggest investors behind LNG expansion have pledged to achieve carbon neutrality by 2050, none that are highly exposed to LNG have committed to end all financial services. Only seven players out of the top 30 banks and top 30 investors tackle LNG through their sector policies, and none of them is doing so effectively. The seven banks with some LNG restrictions are all European: ING, Barclays, BNP Paribas, BPCE, Crédit Agricole, HSBC, and Société Générale. Not one of these policies addresses corporate financing, instead they only cover LNG export terminal project financing, and they do so insufficiently to curb the banks’ support for LNG expansion.
For more information about the involvement of financial institutions of the following countries in LNG expansion, see the country briefs:
The countries behind the banks giving the most support to LNG expansion (total amount in LNG expansion between 2021 and 2023, in US$ million)
The 30 banks supporting the most LNG expansion
The countries behind the investors giving the most support to LNG expansion in May 2024 (in US$ million)
The 30 investors supporting the most LNG expansion
Financial institutions must stop supporting LNG developers’ expansion plans
A significant number of planned LNG terminals could not happen without the support provided by financial institutions. Banks and investors must immediately adopt robust exclusion policies to put an end to their financial support to LNG developers and their projects.
Reclaim Finance calls for banks to adopt comprehensive policies to:
- End financial services for new LNG projects.
- End financial services for LNG developers.
Reclaim Finance calls for investors to adopt comprehensive policies that:
- Require LNG companies in their portfolios to immediately stop LNG expansion.
- Stop new investments in companies developing new LNG export terminals, and that direct the use of existing holdings to engage and vote against strategic management-proposed items (for example, the re-election of directors, remuneration, and financial statements).
