Barclays has said it will no longer finance upstream oil and gas expansion projects or related infrastructure.

According to the bank’s updated climate change statement, it will no longer provide project finance or other direct finance for upstream expansion. There will also be “restrictions” for new energy clients engaged in expansion and on non-diversified energy clients “engaged in long-lead expansion”, as well as “additional restrictions on unconventional oil and gas, including Amazon and extra heavy oil”.

At the project level, Barclays said it will not directly finance oil and gas projects in the Arctic Circle and projects involving hydraulic fracturing, or fracking, in the United Kingdom and Europe. It also said it will not provide direct financing to be used for the construction of new oil sands exploration, production, or processing assets, as well as oil sands pipelines.

Further, Barclays said there would be requirements for energy clients to have 2030 methane reduction targets, a commitment to end all routine/non-essential venting and flaring by 2030 and near-term net zero aligned Scope 1 and 2 targets by January 2026.

The bank added that it expects energy clients to produce transition plans or decarbonization strategies by January 2025.

The update follows its commitment to finance $1 trillion of sustainable and transition finance by 2030, Barclays said in a recent statement.

Barclays noted it would take time to fully implement the internal systems and controls necessary to apply the restrictions, but it is targeting to establish them by June 30. “Accordingly, there may be transactions that are not identified during this period or, at the point in time at which a transaction is identified, Barclays determines it would be commercially unreasonable not to proceed with the transaction”, it said.

The bank further clarified that any existing upstream and unconventional oil and gas commitments or financing entered into prior to any of the restrictions coming may remain in place, but the refinancing of any such commitments or financing will be subject to the restrictions.

“Addressing climate change is a critical and complex challenge. We continue to work with our energy clients as they decarbonize and support their efforts to transition in a manner that is just, orderly and addresses energy security”, Laura Barlow, Barclays Group Head of Sustainability, said. “Today we strengthen our commitment to the energy transition, with policies that will focus our capital and resources to the energy companies that play a key role in the transition”.

“Capital is critical to the energy transition, to decarbonize hard-to-abate sectors for the world to reach net zero emissions and create a resilient economy”, Daniel Hanna, Barclays Head of Sustainable Finance, Corporate and Investment Bank, said. “As the number two ranked clean energy advisor globally by BloombergNEF, Barclays is strongly positioned with our capabilities and experience, global reach and role in the global economy to accelerate the investment needed for real-world decarbonization, while supporting our energy clients’ transition”.

“Publishing our Transition Finance Framework reinforces our commitment to be transparent in how we are mobilizing $1 trillion of Sustainable and Transition Finance by the end of 2030 while Barclays continues to be a leading global clean energy adviser and financier, unlocking growth from the energy transition”, Hanna added.

Barclays said it recently created a new energy transition group in the Corporate and Investment Bank, led by Mike Cormier, Global Head of the Energy Transition Group.

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