21st Sep 2023

EU and US banks fuelling climate 'hypocrisy' in Africa

  • France's BNP Paribas was the biggest European commercial investor in African fossil fuel projects between 2019 and 2022 (Photo: Can Pac Swire, Flickr)
Listen to article

As the 27th climate conference (COP27) takes place in Egypt, a new report came out on Tuesday (15 November) detailing how Western banks are financing a new wave of fossil-fuel expansion on the continent.

In it, French NGO Reclaim Finance and Urgewald, a Germany-based group, as well as 36 African civil society organisations identify the financiers and investors behind 200 oil and gas companies active in Africa.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Between January 2019 and July 2022, 325 commercial banks channelled over €98bn to companies that are developing new fossil projects in Africa, most of it from North American, European, and Japanese banks.

French banks, particularly BNP Paribas and the Crédit Agricole Group through its subsidiary Amundi, are singled out as the most active European supporters of fossil fuel projects on the African continent.

The top five lenders involved during this period were Citibank ($5.6bn), JP Morgan ($5bn), France's BNP Paribas ($4.6bn), Bank of America United States ($4.1bn) and Société Générale ($4bn).

Most Western banks have joined the Net-Zero Banking Alliance (NZBA), launched in April 2021, which requires them to reduce the emissions associated with their investments to zero by 2050.

It covers 40 percent of global assets, and 70 percent of the €98bn channelled to African fossil fuel projects comes from NZBA-banks. But the green rules only include direct loans.

Western banks and investors underwrote €55bn worth of bonds issued by African lenders on behalf of the companies, but these operations are not covered by the NZBA code — a system Katrin Ganswindt, finance campaigner at Urgewald, described as "net-zero hypocrisy."

"Net-zero commitments for tomorrow are meaningless if today's finance keeps flowing into the expansion of fossil fuel production and use," she said.

On the investor side, the situation is similar, albeit less direct. US investment giants BlackRock and Vanguard and European pension funds and insurers have also made net-zero pledges.

But indirectly, they have backed fossil-fuel expansion in Africa by buying bonds from companies actively developing new fossil-fuel projects.

In July 2022, 5000 institutional investors held shares and bonds totalling €109bn in those companies.

Fossil-fuel expansion

All this money has led to a boom in new fossil-fuel activity on the continent.

Since 2017 an area larger than France and Italy combined has been licensed for new oil and gas exploration in Africa. Companies are currently searching for new reserves in 45 African countries, and Egypt, the host of COP27, is one of the top destinations.

According to data from Urgewald's Global Oil and Gas Exit List (GOGEL), oil companies will add 15.8bn barrels of oil to their production reserves in Africa before 2030. This only includes fields already in active development or close to it and can start production within the next one to seven years.

The extraction and combustion of these resources would release eight gigatonnes of CO2 into the atmosphere — more than double the EU's annual emissions.

Most of these projects are geared towards exports and are dominated by foreign companies like Canadian oil and gas company ReconAfrica and French supermajor TotalEnergies, the company responsible for more new fossil-fuel projects on the continent than any other company.

Research by Oil Change International, a Washington-based NGO not involved in the study, had previously shown foreign multinational corporations own two-thirds of the projected new gas and oil production in Africa by 2050.

Oil companies like TotalEnergies insist their investments in oil and gas benefit local communities. But Mozambique is one of the largest energy producers in Southern Africa — and may become one of the largest liquified natural gas exporters by 2026 — but it has remained energy poor.

And a recent report by the environmental organisation Friends of the Earth detailed how a gas discovery off the coast of Mozambique fuelled an Islamic insurgency in 2017, which is ongoing today and has led to thousands being killed.

"If we are going to export gas without using it ourselves," Carlos Lopes, a professor at the Nelson Mandela School of Public Governance at the University of Cape Town, told EUobserver. "Africa will continue to be the vulnerable provider commodities to sustain consumption elsewhere," he said.

"We don't want to enter into new dependency relation for energy," he added.


Three problems with the EU's 'Global Gateway' to Africa

The EU's investment package for development, the so-called 'Global Gateway', which Ursula von der Leyen described as the "future of the EU's development cooperation", seems fixated on boosting private sector investments in energy, infrastructure and climate-smart solutions in Africa.

African Union chief raises alarm over food crisis at EU summit

Disruption in exports of grain and fertilisers as a consequence of the Ukraine war is triggering a "worrying" situation for the continent hosting 282 million undernourished people, African Union president Macky Sall told EU leaders at the summit.


West needs to counter Russia in Africa, but how?

Russian influence in Africa has gradually grown over the past decade and poses various problems — for local populations as well as for US and European interests


EU export credits insure decades of fossil-fuel in Mozambique

European governments are phasing out fossil fuels at home, but continuing their financial support for fossil mega-projects abroad. This is despite the EU agreeing last year to decarbonise export credits — insurance on risky non-EU projects provided with public money.


The gaping green-hydrogen gap in EU policy

The challenge of decarbonising shipping and aviation has come out of the shadows and into the spotlight this year — but current EU legislation doesn't get either sector to where it needs to go.

Latest News

  1. Europe must Trump-proof its Ukraine arms supplies
  2. Antifascism and fascism are opposites, whatever elites say
  3. MEPs back Germany's Buch to lead ECB supervisory arm
  4. Russia to blame for Azerbaijan attack, EU says
  5. Fresh dispute may delay EU-wide migration reforms
  6. MEPs call for extra €10bn to boost EU's long-term budget
  7. No changes to Turkey deal on Nato, Sweden says
  8. Socialist MEP defends own side jobs after voting to ban others

Stakeholders' Highlights

  1. International Medical Devices Regulators Forum (IMDRF)Join regulators, industry & healthcare experts at the 24th IMDRF session, September 25-26, Berlin. Register by 20 Sept to join in person or online.
  2. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  3. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  4. International Medical Devices Regulators Forum (IMDRF)Join regulators & industry experts at the 24th IMDRF session- Berlin September 25-26. Register early for discounted hotel rates
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Stakeholders' Highlights

  1. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  2. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  3. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  4. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  5. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics
  6. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains

Join EUobserver

Support quality EU news

Join us