(This article first appeared in the current, oil-themed issue of Foto8 magazine – https://www.foto8.com/new/in-print/8-magazine )

Despite the fact that there is not a single drop of crude to be found underneath the streets of London, the city acts as one the international capitals of the oil industry. Companies operate here to take advantage of the complex web of financial, political and legal services that allow them to drill in many other parts of the world. Only a handful of the bigger companies have sufficient financial resources to pay for new infrastructure necessary to expand their operations. In the UK, the high street bank that has been most heavily involved in financing the hydrocarbon industry is the Royal Bank of Scotland.

At first glance, high street bank’s impacts on climate change might look minor. Carbon emissions appear comparatively low, primarily caused by computer screens and business trips. Yet RBS’ products are not only bank statements and analysts’ reports; banks are providers of financial services including loans, investments, accounts. These services play a central role in the exploration, production and transportation of oil. While ‘internal’ emissions from the bank’s own energy use are relatively low, the carbon emissions embedded within its financial products are staggering, to the point where a report calculated that in 2006, RBS’ ‘embedded’ emissions were greater that the actual emissions of Scotland itself.

In 2000, RBS started positioning itself as ‘the oil and gas bank’, providing oil corporations with the cash to build and operate drilling rigs, pipelines and oil tankers. Working closely with everything from the world’s biggest oil companies to start-up minnows, RBS structures the loan agreements and provides the credit facilities that make new oil and gas extraction possible. While the RBS head office lies just outside Edinburgh, the London-based Oil and Gas Team work out of 135 Bishopsgate, towering above Liverpool Street Station. It is from these offices that the team underwrites projects and operations from West Africa to the Amazon rainforest, from the North Sea to the Middle East.

The bank has also been associated with more controversial forms of oil production, notably tar sands extraction in Canada. The tar sands have been heavily criticised for their carbon intensity, as well their horrific impacts on vast tracts of boreal forests, water ways and the local indigenous communities that are increasingly unable to practice traditional fishing and hunting, and experiencing spikes in rare forms of cancer as a result of the industrial pollution. In the three-year period from 2007-2009, RBS beat other UK banks in underwriting the largest amount of loans to companies operating in tar sands in Canada, to a total of more than US $7.5 billion. In 2009, RBS underwrote a £1 billion debt to ConocoPhillips, an oil company that aims to aims to expand production from its three tar sands projects eightfold by 2015.

On the same day in March 2010 when their head of Corporate Sustainability was claiming in the Guardian that “linking RBS to tar sands developments in Canada was highly misleading,” it was announced in a Canadian newspaper that the bank was opening a new office in Calgary, the heart of the tar sands developments, that was to be an extension of their Houston-based oil and gas division.

Of course, RBS is more famous for its spectacular nose dive in the Autumn of 2008. In total, the bank has received £45 billion pounds in public money, to the point that it is 83% owned by UK taxpayers. Critics have argued that the use of public money should involve a greater degree of accountability for the bank in the type of companies that it finances, but this has not been the case. A front-page expose in the Scottish Sunday Herald showed that in the first two years since the initial bail out took place, the bank had provided nearly £13 billion of finance to the oil and gas industries. The oil companies that had been financed using public money included Tullow Oil who are operating in the politically sensitive border regions between Uganda and the Democratic Republic of Congo, and Edinburgh-based Cairn Energy, who have recently been engaging in offshore drilling in ‘iceberg alley’, a treacherous stretch of Arctic waters off the coast of Greenland.

A number of questions have been raised in Parliament about the policy incoherence in promoting the need to address climate change on one hand, while allowing a publicly owned institution to pour billions into fossil fuel companies. During a Parliamentary debate on banking reform, Labour MP Andrew Smith, said that RBS was, ‘attempting to externalise the risks of climate change which sooner or later, will fall on tax payers. Those are the same taxpayers who now own RBS, so those external costs are no longer carried by a third party.” In it’s pre-budget report of 2009, the Environmental Audit Committee recommended that, “the Treasury examine and report on how some form of environmental criteria for the investment strategies pursued by these [part public-owned] banks might be imposed, and what impacts this might have on UK sustainable development objectives.”

Despite this, and an attempt by civil society groups to bring a Judicial Review over the lack of environmental criteria in RBS’ investment decisions, the Treasury is adamant that the public shares in RBS will be managed strictly on a commercial basis. The refusal reflects the Treasury’s broader lack of joined up thinking with regards to climate change and the economy. While the massive bail out and effective nationalisation of one of the UK’s biggest financial institutions involved a massive leap in what was politically possible at the time, using that same public ownership to affect positive change with regards to the climate has been discounted as even a remote possibility.

Dealing with the threat of the climate crisis involves simultaneously reining the massive investment into new fossil fuels as well as ramping up the money that is going into renewable energy. It is estimated that £200 billion needs to be invested in UK energy infrastructure in the next 10-15 years if the government is going to meet its renewable energy commitments. While the coalition government appears to be backtracking on its promise to create a Green Investment Bank (GIB) in order to help finance the urgently needed transition to a low-carbon economy, a report has been published that has showed how the state-controlled banks, if the political will was there, could be recruited to the GIB cause, and in doing so redefine the roles of banks to meet the needs of society rather than allowing the sector to return to the short-termist approach which contributed to the financial crisis.

The pressure from within Parliament, and from NGOs has also been augmented by grassroots action. In the last four years, numerous student groups in the People & Planet network have been targeting campus-based RBS branches, while in August 2010, around 800 people occupied the backyard of the RBS headquarters on the outskirts of Edinburgh to protest against its fossil fuel finance. Over the course of five days, the Camp for Climate Action orchestrated a series of high-profile interventions against the bank. With climate change and the abuse of fossil fuels becoming the defining issue of a generation, the question is how much brand damage the already beleaguered bank can sustain before it withdraws from bankrolling the unfolding climate catastrophe.