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Why Banks’ Green Plans Include Lots of Oil and Gas

An icier attitude on Arctic drilling.

An icier attitude on Arctic drilling.

Photographer: Claudia Thaler/AP

Just after global talks organized by the United Nations to rein in greenhouse gas emissions stalled this month, Goldman Sachs Group Inc. seized the opportunity to announce a tougher stance on fossil fuel financing. Environmental groups such as the Rainforest Action Network and the Sierra Club lauded the move. But the steps Goldman and other big banks are taking can also be seen as minuscule compared with the $1.9 trillion in financing they’re estimated to have extended to the fossil-fuel industry in the three years following the 2015 signing of the Paris climate accords.

The company said it would do less to finance some kinds of pollution, and would harness money to support more environmentally friendly businesses. It pledged to stop direct financing of new mines producing thermal coal, the kind burned to generate electricity, and Arctic oil exploration and development, including in the Arctic National Wildlife Refuge in Alaska. They also said they would end financing projects of new coal-fired power plants -- an expansion of an earlier pledge that applied only to the U.S. and other developed countries. The company did say that it will make exceptions for projects that include carbon capture and storage or equivalent emissions reduction technology, though those are seen as years away from being economically viable. It also said it would engage with thermal-coal miners on their plans to diversify away from the fossil fuel, and would phase out financing for companies that don’t have such strategies “within a reasonable time frame.” Most other banks have just reduced coal financing instead of phasing it out.