Royal Bank of Canada Commits to Tripling Lending for Renewable Energy by 2030, Aiming for Net-Zero Emissions by 2050

Royal Bank of Canada plans to triple lending for renewable energy to C$15 billion ($11 billion) by 2030, as part of its efforts to achieve net-zero emissions in its lending practices. ‘by 2050, Canada’s largest bank said Wednesday.

RBC has been attacked by climate advocates because it is one of the largest fossil fuel financing institutions.

“By 2024, we are accelerating our strategy for financing the energy sources necessary to build a net-zero economy with greater emphasis on the development of low-carbon energy,” said the CEO Dave McKay in his climate report.

The Toronto-headquartered bank also said it plans to increase its low-carbon energy lending to C$35 billion and allocate C$1 billion by 2030 to funds and companies that help their clients achieve their climate goals.

RBC’s outstanding loans to the oil and gas sector stood at approximately C$5.58 billion at the end of January, down about 8% from a year earlier. According to a report released Wednesday by the non-profit group InfluenceMap, Canada’s big five banks increased their exposure to fossil fuel financing to 18.4% in 2022, up from an average of 15.5% in 2020, for a total of 275 billion dollars.

This figure compares to an average of 6.1% for large American banks and 8.7% for European banks during the same period.

RBC said it has created a new category of decarbonization financing to accelerate the deployment of capital for emissions reduction efforts in high-emitting sectors.

Jennifer Livingstone, RBC vice-president of climate, said the bank’s actions will help clients reduce their emissions and provide capital for innovative climate solutions.

RBC said Scope 1 physical emissions intensity decreased from the 2019 baseline due to its efforts to increase lending in the power generation sector to customers with sources renewable energy and other low-carbon energy sources.

It said 79% of its energy sector clients have established transition plans and 48% have met minimum criteria.

RBC noted that it was difficult to align with the global goal, set in the 2015 Paris Agreement on climate change, of limiting temperatures to 1.5 degrees Celsius above pre-industrial levels. Only 2% of the oil and gas sector and 34% of the power generation sector are aligned with 1.5 degrees, she noted.

“RBC has taken a small step forward by pledging to triple financing for low-carbon energy by 2030. But this is largely insufficient given that the bank continues to finance coal, oil and polluting gases to the tune of $37 billion in 2023,” said Richard Brooks, director of climate finance at environmental organization Stand.earth.

($1 = 1.3524 Canadian dollars) (Reporting by Nivedita Balu in Toronto; Editing by Richard Chang)

2024-03-06 17:43:49
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