Major financial institutions directed over $1.6 trillion toward fossil fuel companies between 2021 and 2024, funding an industry launching more than 2,300 new oil, gas, and coal projects during a period when climate scientists and energy analysts maintain such investments should have ceased entirely, reports FTM.
The financing pattern contradicts the International Energy Agency’s 2021 assessment that new fossil fuel funding must stop to maintain any realistic pathway to limiting global warming to 1.5°C above preindustrial levels. Analysis from CarbonBombs.org — a collaboration between four environmental NGOs—reveals these new projects, combined with existing “carbon bombs” generating over one gigatonne of CO2 across their lifetimes, would exceed the world’s remaining carbon budget by a factor of 11.
Capital Flows and Corporate Recipients
The financing landscape spans institutions across Canada, China, Japan, and the United States, with significant European participation. Among European banks, Barclays, Crédit Agricole, and Deutsche Bank maintain substantial exposure to fossil fuel corporate financing.
Three major recipients illustrate the scale: Eni received $33.1 billion, TotalEnergies $21.8 billion, and China National Offshore Oil Corporation $7.3 billion. These companies alone accounted for 364 new projects from 2021 to 2024—roughly 16% of the period’s total. Lesser-known entities also secured considerable funding, including Switzerland-based Mercuria Energy Group Holding Ltd with over $23.5 billion since 2021.
The data represent overall corporate financing rather than project-specific funding, a distinction that matters for assessing direct environmental impact versus broader corporate relationship maintenance. Crédit Agricole noted its financed companies maintain “diversified” operations ,potentially including decarbonization initiatives in renewables or hydrogen, positioning corporate financing as enabling such transitions. Deutsche Bank stated it had “reduced its engagement in carbon-intensive sectors” but declined to verify specific figures.
The Stranded Asset Question
The economic rationale for these investments faces scrutiny on multiple fronts. Sam Fankhauser, professor of climate economics and policy at Oxford University, projects many of these holdings will ultimately require write-offs as stranded assets, suggesting banks may be mispricing transition risk.
Recent data from the International Renewable Energy Agency supports this view: solar power operated at 41% lower costs than the cheapest fossil fuel option in 2024, while wind power maintained a 53% cost advantage globally. The risk-return profile for renewables has shifted favorably compared to fossil fuels, raising questions about whether traditional energy sector valuations adequately reflect regulatory and market transition risks.
A 2024 paper in Science, co-authored by Fergus Green of University College London, argues existing fossil fuel infrastructure already exceeds requirements for meeting global energy demand through 2050 under 1.5°C scenarios—aligning with the IEA’s earlier position. This analysis suggests new fossil fuel investment responds to supply-side expansion strategies rather than demand-side necessity.
Carbon Budget Arithmetic
The Potsdam Institute for Climate Impact Research’s Carbon Clock indicates the world’s carbon budget for staying below 1.5°C will be exhausted in under four years at current emission rates. This timeline creates acute pressure on the COP30 climate summit scheduled for Belém, Brazil, where participating nations will confront the divergence between stated climate commitments and actual capital allocation patterns.
The Vaca Muerta shale gas region in Argentina exemplifies the scale mismatch between new projects and carbon constraints. Roughly Belgium-sized, it contains the world’s second-largest shale gas reserves and fourth-largest shale oil reserves. Full extraction would release 24 billion tonnes of CO2—equivalent to eight years of European Union emissions—from a single geological formation developed with financing channeled through entities like Mercuria’s subsidiary Phoenix Global Resources.
Green advocates for establishing “an international norm against new fossil fuel projects,” suggesting the policy challenge extends beyond individual project economics to broader coordination problems requiring multilateral frameworks. Fankhauser identifies a policy toolkit spanning renewable subsidies, carbon pricing mechanisms, and environmental regulations designed to “break down the business case for fossil fuels,” acknowledging that market forces alone may not drive sufficient capital reallocation at the necessary speed.
The financing patterns documented through 2024 suggest banks are either pricing in policy failure on climate targets or anticipating regulatory frameworks will accommodate higher-than-planned emissions pathways. Either scenario carries implications for asset valuations, regulatory risk assessment, and the credibility of institutional climate commitments made through voluntary frameworks and national pledges.
