This oil and gas industry news does not bode well for oil and gas contractors in the UK. The Royal Bank of Scotland has reduced lending to oil and gas companies, but has doubled loans to green energy companies in the UK. The new figures reveal that RBS now provides loans of up to £1 billion to the green energy sector.
Until recently, RBS was one of the biggest financiers of fossil fuels, and this made it a target of climate change campaigners. The move comes after the bank’s withdrawal from Asian and North American markets. RBS has also ended its business interests in Canada, where the bank was financing tar sands projects. In December 2015, RBS also pulled back from mining companies focusing on coal. The bank has announced that it would no longer be financing any new tar sands projects.
RBS is still 73% state-owned after the UK Government used £45 billion of taxpayers’ money to bail the bank out in 2008 and 2009.
Figures disclosed by the bank show that in 2015, its global exposure to the oil and gas industry fell 70% compared to 2014. This reduction comes after the oil and gas sector witnessed a slump in 2015.
Financial institutions are moving away from investments in coal, oil and gas. The biggest sovereign wealth fund in the world, which is held by Norway, dropped 52 coal companies, including Drax, the UK-based coal company. However, when it comes to RBS, the true test of its commitment to green energy will come when the oil and gas sector recovers.
A statement by RBS said that it was supporting its clients in carbon-intensive industries to diversify and shift from high-impact activities. RBS said that it would work with its clients to achieve this goal, but where it feels the impact is too high, it will withdraw support.