Cashing in on Tar Sands: RBS, UK banks and Canada's ... - Platform

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executivesummaryPetrol companies have been aware for a century of thevast quantities of oil rich bitumen ly<strong>in</strong>g beneath the borealforests of Alberta. But these ‘tar sands’ 1 lay relativelyuntouched dur<strong>in</strong>g the second half of the twentieth centurywhen oil was plentifully and readily available from moreaccessible sources. In those years, it was simply tooexpensive and uncompetitive to extract oil from the tarsands. However as the oil sources available to Westernoil majors became scarcer, the relative commercialattractiveness of tar sands improved and significant<strong>in</strong>vestments <strong>in</strong> their extraction began.Over the past decade there has been grow<strong>in</strong>g <strong>in</strong>ternationalopposition to the development of the tar sands of Alberta.These extraction ventures – dubbed ‘the most destructiveproject on earth’ 2 – have become recognised as threaten<strong>in</strong>gto have a devastat<strong>in</strong>g impact on the global climate. Theunprecedented scale of the projects and the <strong>in</strong>tensity oftheir energy usage means that they constitute an <strong>in</strong>dustrialtipp<strong>in</strong>g po<strong>in</strong>t, a step change from one form of hydrocarbon– conventional oil – <strong>in</strong>to a far more carbon <strong>in</strong>tense form –unconventional oil. 3Canada is the <strong>in</strong>ternational oil <strong>in</strong>dustry’s test site – if itbecomes acceptable to f<strong>in</strong>ance the tar sands of Alberta, thenthe global f<strong>in</strong>ance sector will have normalised a disastrouslyhigh-carbon development path. It is for this reason that theCanadian tar sands have become a frontl<strong>in</strong>e <strong>in</strong> the struggle6
aga<strong>in</strong>st the destruction of the climate though the extractionof hydrocarbons.All new fossil fuel <strong>in</strong>frastructure is extremely capital<strong>in</strong>tensiveto construct and tar sands are even more costlydue to the extra process<strong>in</strong>g required to produce the oil,the pipel<strong>in</strong>es to br<strong>in</strong>g <strong>in</strong> gas to heat the tar sands andso on. Estimates from <strong>in</strong>dustry analysts for the capital<strong>in</strong>vestment needed over the next 20 years to expand tarsands production <strong>in</strong> the Alberta region range from $120-220billion. 4 Outside of North America, London is home to thehighest concentration of f<strong>in</strong>ancial <strong>in</strong>stitutions <strong>in</strong>vest<strong>in</strong>g <strong>in</strong> tarsands extraction. 5This report summarises some of the ma<strong>in</strong> problemswitnessed with tar sands extraction <strong>in</strong> Canada. It presentsevidence about the impacts of tar sands extraction on localpeoples’ health, land rights and livelihoods, as well as onthe environment. It documents which UK banks are <strong>in</strong>volved<strong>in</strong> provid<strong>in</strong>g f<strong>in</strong>ancial back<strong>in</strong>g for tar sands, how muchmoney they are provid<strong>in</strong>g, and to which oil companies. Itf<strong>in</strong>ds that:• The three ma<strong>in</strong> high street banks <strong>in</strong> the UK(Barclays, HSBC and the Royal Bank of Scotland)are all <strong>in</strong>volved <strong>in</strong> provid<strong>in</strong>g significant sums ofproject or corporate f<strong>in</strong>ance for oil extraction fromCanadian tar sands.• In the three year time frame exam<strong>in</strong>ed between2007-2009, the Royal Bank of Scotland (RBS) hasled underwrit<strong>in</strong>g for the largest amount <strong>in</strong> loans tocompanies operat<strong>in</strong>g <strong>in</strong> tar sands <strong>in</strong> Canada, to atotal of more than $7.5 billion.• S<strong>in</strong>ce the <strong>in</strong>itial recapitalisation of UK banks tookplace <strong>in</strong> October 2008, RBS has underwrittencorporate debt and equity worth nearly $2.5 billionwith tar sands related companies.• In the same period Barclays Bank has led the mostcorporate debt and equity to tar sands-relatedcompanies, more than $14 billion.Out of the many tar sands related companies that havereceived f<strong>in</strong>ance from these banks, three are exam<strong>in</strong>edas case studies to give a snapshot as to the nature of thecompanies, how they conduct their bus<strong>in</strong>ess <strong>in</strong> obta<strong>in</strong><strong>in</strong>g tarsands and the public controversies they have been <strong>in</strong>volved<strong>in</strong>.The particular role of RBS <strong>in</strong> f<strong>in</strong>anc<strong>in</strong>g tar sands is furtherexam<strong>in</strong>ed <strong>in</strong> the context of its well known position as the UKbank most heavily associated with f<strong>in</strong>anc<strong>in</strong>g all fossil fuelsectors, and that with 84% of RBS now owned by the UKtaxpayer there is an extra dimension of public accountability<strong>in</strong> how the bank <strong>in</strong>vests.All of the major banks <strong>in</strong> the UK have responded to public7
Page 3 and 4: Cashing</s
Page 5: executivesummary5
Page 9: • Develop revised in</str
Page 12 and 13: THEIThe impacts of tar sands extrac
Page 15 and 16: guaranteed Indigenous Peoples the
Page 17 and 18: worse development outcomes than cou
Page 19: disastrous legacy especially for Ab
Page 22 and 23: UKBANKFINANCINGFin
Page 24 and 25: Mike Mercredi, Fort Chipewyan - Do<
Page 27 and 28: CASESTUDIES27
Page 29 and 30: dishonest” by The Guardian. 51 Th
Page 31 and 32: ShellRBS underwrote two amounts of
Page 33 and 34: Clayton Thomas-Muller - Tar sands a
Page 35: government and First Nations that d
Page 38 and 39: PRBS is the UK bank that has receiv
Page 40 and 41: “In the long term, any oil compan
Page 42 and 43: Case study: Pension funds & shareho
Page 44 and 45: “We are seeing a
Page 47 and 48: CONCLUSIONS47
Page 49 and 50: to prevent the fin
Page 51 and 52: Appendix I: Financ
Page 53 and 54: Appendix II: RBS and its history of
Page 55 and 56: Appendix III: Equator Prin<
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choices that harm communities and e
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12 ‘Parts per million’ - the me
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38 “Hardtalk”, BBC TV, 21 July
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69 www.processonlin</strong
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94 “An Analysis of the Latest Res
Page 67 and 68:
crime-in-history-7
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151 Climate Princi
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“Investment decisions taken now w
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