National Australia Bank’s new fossil fuels policy under fire

National Australia Bank boss Ross McEwan has defended the bank’s sweeping new oil and gas lending policy from fierce criticism by climate and activist groups.

National Australian Bank copped heavy criticism on Tuesday over its new oil and gas policy. Picture: NCA NewsWire/Bianca De Marchi

National Australia Bank boss Ross McEwan has issued a strident defence of the bank’s sweeping new oil and gas lending policy, after copping fierce criticism from climate and activist groups.

NAB’s annual report outlined the new policy on Tuesday, which was issued amid heightened pressure around how banks are managing the transition away from financing fossil fuel and high emitting projects.

After a detailed review of the oil and gas sector, NAB said it would cap that exposure at $US2.4bn ($3.2bn) and cut its exposure from 2026 through to 2050, aligned to an International Energy Agency (IEA) 2050 scenario. The bank’s annual results showed the loan portfolio for oil and gas extraction amounted to $2.9bn in the 12 months ended September 30, giving NAB scope to increase that lending over the medium term.

“We will only consider directly financing greenfield gas extraction in Australia where it plays a role in underpinning national energy security. We will not directly finance greenfield gas extraction projects outside Australia,” the policy said.

The Australian on Tuesday revealed NAB was believed to be arranging a debt package for the proposed purchase by US-based Global Infrastructure Partners of a 49 per cent interest in Woodside’s Scarborough gas project.

Mr McEwan said the new policy reflected the “important role” banks had in helping customers transition to a lower carbon emission framework.

Explaining what NAB considered matters of national energy security, he added that it would only invoke the policy by “rare exception”.

“It would have to be driven by a state or federal requirement and asking us to assist on a national interest basis, now we don’t get too many of those and we don’t expect too many,” Mr McEwan said.

“You just need to cast your mind to what’s going on up in the UK and Europe at the moment, energy prices are rising dramatically, there's a lack of supply in that marketplace.”

Mr McEwan poured cold water on suggestions NAB was participating in greenwashing and noted the bank was working with its largest 100 emitting customers to assist in developing or improving their plans to transition to a lower carbon emitting framework.

He also highlighted that NAB had lent more than $6.5bn for renewable energy projects in the past five years.

But the new policy attracted stinging criticism from climate groups and campaigners.

“NAB’s policy is a cynical attempt to wordsmith its way out of the climate crisis,” said Jack Bertolus, Market Forces’ Australian campaigns co-ordinator.

“The IEA provides clear red lines to clarify fossil fuel developments no longer permissible if we are to achieve the goal of net-zero emissions by 2050. NAB’s policy twists and blurs those lines, allowing it to continue funding business-as-usual fossil fuel expansion. The bank isn’t serious about net zero by 2050.”

On coal, NAB’s policy stipulates it has capped thermal coal mining exposures at 2019 levels and the bank has updated plans to reduce these exposures by 50 per cent by September 2026, intended to be effectively zero four years after that. That is apart from “residual performance guarantees” to rehabilitate existing coal assets.

The Australian CEO of 350.org Lucy Manne said: “Every dollar spent on expanding oil and gas financing is fuelling climate chaos – and in this policy NAB is leaving the door wide open to pour billions into fossil fuel expansion.”

NAB’s policy is being unveiled after the CEOs of some of Australia’s largest companies – including Rio Tinto, Fortescue and Santos – attended a high-level meeting with Prime Minister Scott Morrison at a global climate summit in Glasgow last week.