EU Locking In Fossil Dependency as Climate Ambition Slips, Study Finds
Global banks raised fossil fuel financing 8% to $906 billion in 2025, reinforcing evidence of a widening gap between climate commitments and capital flows.
A study reported by Montel on Monday (2026-08-03) concluded the European Union is entrenching fossil fuel dependency as its climate ambitions lose pace with actual energy investment decisions.6
Global bank financing for fossil fuels reached $906 billion in 2025, an 8% increase from 2024, according to the Banking on Climate Chaos report coordinated by Rainforest Action Network campaigners. The previous year's total was $869 billion, itself up $162 billion from 2023. Since the Paris Agreement in 2015, the world's 65 largest banks have directed $8.7 trillion into oil, natural gas, and coal. The 2025 acceleration came amid climate policy rollbacks, the report said, particularly at US and Japanese banks.3
JPMorgan Chase committed $58.2 billion to fossil fuel companies in 2025, a 12.5% rise from 2024, retaining its position as the world's largest fossil financier. Bank of America placed second at $47 billion. Japan's Mitsubishi UFJ Financial Group matched that total after raising its fossil financing 21% in a single year.3
US banks now account for 32% of all global bank fossil fuel financing, up from 28% in 2021, making American institutions the largest single source of fossil capital globally.3
European banks are split. BNP Paribas cut fossil financing by 28%, UBS by 36%, and La Caixa by 34%. But Standard Chartered raised its exposure by 28%, Deutsche Bank by 20%, and HSBC by 16%, the report found.3
The Bank of England moved to reduce its own coal exposures, oilprice.com reported on Saturday (2026-08-01). That came less than a year after the TPI Global Climate Transition Centre at the London School of Economics found no major bank had yet committed to stop funding new oil, gas, and coal projects, a bar that 2025 aggregate financing data suggests remains unmet.5
At multilateral climate talks in May (2026-05-17), language calling for a fossil fuel phase-out or phase-down was removed from the final agreement, a concession the Economist described as a red line for oil-producing states. Cuts of 7% per year are needed to reach agreed temperature goals, a pace analysts said at the time is not currently achievable.1
The UK has moved in the opposite direction. The Department for Energy and Net Zero announced in June (2026-06-02) a seventh carbon budget requiring emissions 87% below 1990 levels over the period 2038-2042, tightened from the 81% target covering 2033-2037.2 UK Carbon allowances were priced at £58.01 per tonne of CO2 on Tuesday (2026-08-04).
Human-caused warming reached 1.37 degrees Celsius in 2025, with fossil fuel combustion emissions at an all-time high, climate researchers reported in June (2026-06-11). The remaining carbon budget for holding warming to 1.5 degrees could be exhausted within three years, the same scientists estimated.4
ICE Brent crude front-month fell 0.57% to $81.45 a barrel on Tuesday (2026-08-04). ICE TTF front-month gas was unchanged at €57.57 per megawatt-hour. Newcastle coal sat at $117.75 a tonne, and a coal equity ETF gained 1.95% in the session.
Any EU move to formally lower carbon ambition would feed into European carbon allowance pricing on longer-dated contracts — the benchmark that determines fuel-switching economics and low-carbon investment returns for the region's power and industrial sectors. How Brussels responds to Monday's (2026-08-03) study is the near-term signal for carbon desk traders across the continent.6