The Institute for Energy Economics and Financial Analysis (IEEFA) have called on Australia’s major banks to assess their emissions accounting and reduction targets when reporting methane emissions.
As the globe shifts into gear to fulfill the Paris Agreement and hold the increase in global average temperature, Commonwealth Bank (ASX:CBA), ANZ (ASX:ANZ), Westpac (ASX:WBC), and NAB (ASX:NAB) have been outed for using outdated International Energy Agency (IEA) net zero emissions (NZE) scenarios in climate reports and avoiding discretion in reporting.
IEEFA’s Lead Coal Analyst Anne-Louise Knight reports that NAB and Commonwealth Bank might be “insufficiently ambitious” and underestimating the rate of emission reductions as both banks use outdated NZE scenarios.
NAB uses IEA NZE 2021 for thermal reduction targets, and IEA NZE 2022 for metallurgical coal mining reduction targets, while Commonwealth Bank continues to use IEA NZE 2021 to reference thermal coal mining and upstream oil and gas extraction.
“Although banks recognise the methane risks in other sectors, they largely ignore methane emissions from fossil fuel sectors,” Knight says.
“So far, none of the major banks in Australia report methane emission estimates separately from carbon dioxide for their coal or oil and gas clients.”
Although all greenhouse gases are listed in its targeted emissions for customers in oil, gas, and thermal coal mining sectors, ANZ does not disclose specific greenhouse gases by type.
NAB and Westpac on the other hand only report carbon dioxide-equivalent units, choosing not to state what greenhouse gases are included and leaving customers unaware about the involvement of methane.
Regardless of the bank’s declaration to follow the Partnership for Carbon Accounting Financials (PCAF) methodology, Commonwealth Bank only includes carbon dioxide in reduction targets for oil, gas, and coal sectors.
The PCAF methodology encourages institutions to separately disclose emission types when stemming from specific greenhouse gases that are “material and relevant.”
While financing to thermal coal mining clients is expected to decrease by 2030 as these four banks enlist reduction targets, IEEFA indicates that this proposed phase out might worsen methane exposure risks.
“The lack of a metallurgical coal financing phase-out date, combined with a lack of clarity over methane emissions reporting, means that banks’ climate exposure risks could worsen,” Knight says.
“This is because met coal is more methane-intensive to mine than thermal coal on average.”
As a potent greenhouse gas that makes up 30% of post-industrial increase in global warming, methane naturally appears in coal seams as a liquefied natural gas used for heating, cooking, and electricity generation.
Australia has a high contribution to methane pollution, producing almost four million tonnes each year primarily from agriculture and fossil fuel mining, as reported by Mining.com.au.
In hopes of achieving the Paris Agreement targets, the United Nations Environment Program predicts that 45% of total human-caused methane emissions can be cut within the decade to prevent around 0.3°C of global warming
Write to Maddison Elliott at Mining.com.au
Images: Unsplash
