Green Financing Earnings Outpaced Traditional Energy Financing in 2023

According to Bloomberg, large lenders earned roughly $3 billion from financing so-called “green” projects last year. Meanwhile, lenders reportedly made less than $2.7 billion from the financing of energy projects involving gas and oil. That marks the second consecutive year in which the globe’s largest banks earned more from green financing than traditional energy deals.

The drive for green financing

Recent years have seen the world’s finance industry increasingly focused on devoting more funding to green energy projects. That drive has occurred as the industry has trumpeted its desire to achieve “net zero” emissions. As Bloomberg notes:

“According to an analysis by BloombergNEF, four times as much capital needs to be allocated to green projects as to fossil fuels by 2030 to align with net zero emissions targets. Yet at the end of 2022, that ratio was just 0.7 to 1, largely unchanged from the previous year, BNEF’s latest figures show.”

Notably, progress toward those stated goals has been less than uniform. For example, Europe’s finance sector have been far more aggressive than many U.S. banks. Companies like JPMorgan Chase and Wells Fargo earned hundreds of millions of dollars from funding traditional energy projects in 2023.

U.S. backlash against the net zero push

Part of that disparity in results is due to the differences in political climates between the two regions. Europe has taken a more centralized approach, with its central bank issuing fines against companies that fail to meet its targets. That’s a far different approach than the less centralized regulatory environment in the U.S.

Indeed, multiple U.S. states have taken action to rein in lenders who might threaten to starve traditional energy firms of needed financing. In some states, leaders have targeted banks and other lenders who unfairly restrict finance for oil, coal, and gas companies.

Still, the green financing push appears to be continuing apace. Globally, banks reportedly financed some $583 billion in green project loans and bonds in 2023. During the same period, traditional energy projects received roughly $527 billion.

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