Many banks finance (lend capital) business activities with a negative impact on people and planet. We’ve summarised some of the most environmentally destructive below.
Fracking is the process of drilling down into the earth before a high-pressure mixture of water, sand and chemicals is directed at the rock to release the gas inside. The process can be carried out vertically or, more commonly, by drilling horizontally to the rock layer, which can create new pathways to release gas or used to extend existing channels. The term fracking refers to how the rock is fractured apart by the high-pressure mixture.
The hazards of fracking have manifested in the form of: earthquakes (Blackpool 2011)*, extensive water usage (which must be transported at significant cost), potential escape of carcinogenic chemicals, contamination of groundwater around the site (methane leakage has been shown to be a problem directly associated with fracking**).
Tar sands are a common source of oil. They are formed from a mixture of sand, clay, water, and a thick substance called bitumen. The latter is used to produce gasoline and other petroleum products through extraction from tar sands. Refining it into products like gasoline is generally much costlier than refining liquid oil, due to the complicated process involved in it.
The environmental impact of tar sands is very significant – a gallon of gasoline produced from tar sands leads to emissions of 15% more carbon dioxide emissions than one made from conventional oil. On top of that, mining of tar sands also impacts water supplies due to its high water consumption and pollution by toxic substances which are harmful to human health and the environment. Check out your bank’s policies on Tar sands companies.
Global demand of oil has led fossil fuel companies to prospect in the Arctic region. Arctic drilling is concerning because the risk of oil spills in the arctic region are higher due to fragile Arctic Ice and tricky weather conditions. Although oil exploration in the north is not new, Statoil having done it for the last 20 years in ice-free areas, today’s overall scientific consensus is that an oil spill in the region is inevitable if drilling progresses.
Since no oil and gas company has ever cleaned an oil spill completely, the lack of technology and infrastructure in the arctic region make the occurrence of an oil spill even more of an environmental disaster. For the sake of the animals and the aquatic ecosystem in the region, this drilling should be avoided. See this article in the Guardian for more info.
Coal mining is the process of extracting coal from the ground. Surface mining of coal completely eliminates existing vegetation, destroys the genetic soil profile, displaces or destroys wildlife and habitat, degrades air quality, alters current, and to some extent the permanent, land uses. Of greater concern, the movement, storage, and redistribution of soil during mining can disrupt the community of soil microorganisms and consequently nutrient cycling processes. Coal-fired power plants release more greenhouse gases per unit of energy produced than any other electricity source (US Energy Information Administration).
Check out your Bank’s policies on coal.
Pipelines are constructed to ensure the long-distance transportation of oil or gas to market-areas. Many pipelines have been mentioned in the media over the last few years due to their damaging effects to the environment. See below for some case studies.
Gulf of Mexico
“Pipelines destroy wetlands, pollute our water, threaten our fishing and outdoor recreation industries, and put communities at risk of explosions and pollution. New pipelines are the largest single category of wetlands damage in the Gulf, causing the loss of thousands of acres of wetland forest every year.” – HealthyGulf.org
- “The Bayou Bridge oil pipeline, which is backed by the same company behind the Dakota Access Pipeline, would snake across 11 Louisiana parishes, destroying wetlands and threatening drinking water for hundreds of thousands of people.”
- “The Sabal Trail Pipeline is a proposed 515-mile fracked natural gas pipeline through Alabama, Georgia and Florida. Over 940 acres of wetlands will be impacted by the pipeline project. Hundreds of miles of the proposed pipeline route will cross sensitive limestone or “karst” geology that is prone to sinkholes – risking pipeline rupture and explosion as well as contamination of the sensitive Floridan Aquifer.”
Keystone XL pipeline
This pipeline, crossing the Great Plains, has been approved by President Donald Trump. In a recent article, National Geographic outlines the 3 main impacts of this project:
- The pipeline will go through the natural habitat of endangered species and a potential oil spill would have dramatic consequences.
- The pipeline may increase American reliance on fossil fuel as an energy source, and increase carbon dioxide emissions by expanding the extraction of tar sands.
- There is an immediate threat to the drinking water of local communities, especially the Standing Rock Sioux Tribe, whose reservation is immediately downstream where the pipeline will cross the Missouri River. On a brighter note, the pipeline will provide approximately 12,000 jobs during its construction.
Annovia LNG Terminal, US
This is a Liquefied Natural Gas (LNG) terminal that is planned for the port of Brownsville. It would allow for the export of natural gas, mostly obtained by fracking, from the Gulf of Mexico.
Both Barclays and Santander provided corporate loans of USD 20 million to finance this project.
There are a number of social and environmental concerns associated with this project, highlighted by BankTrack:
- LNG is the most carbon-intensive form of natural gas (it releases the most CO2 per unit of energy produced)
- The proposed terminal is on the edge of the Laguna Atascosa National Wildlife Refuge, where wetland restoration is still ongoing. This is a crucial storm barrier and gives protection to a range of animal species (including endangered species) and native vegetation. Construction of the terminal would disrupt this ecosystem.
- There are other infrastructure projects proposed on this coastline, primarily the Rio Grande LNG and Texas LNG. This amount of infrastructure poses a threat of severe erosion and subsidence, which may result in a large-scale industrial accident.
- The terminal could also significantly impact the local fishing, shrimping and ecotourism industries.
- Annova LNG made a number of requests in April 2015 which would have resulted in taxes on less than 1 percent of the value of the terminal. (Rainforest Action Network) This was in an attempt to minimise tax.
- Highlights & Analysis – Pennsylvania Oil and Gas Emissions Data
- What is fracking and why is it controversial? – BBC News
- Drilling in the Arctic – what is the environmental impact? – The Guardian
- Carbon Dioxide Emissions Coefficients – US Energy Information Administration
- Destructive Pipelines, Resisting Dirty Energy – HealthyGulf.org
- 4 Key Impacts of the Keystone XL and Dakota Access Pipelines – National Geographic
- Rio Grande Valley – At Risk From Fracked Gas Export Terminals