Contentious Keystone XL and Line 3 pipelines present major test of banks’ commitments on Indigenous rights and the climate
As the U.S. enters its the deadliest phase yet of the Covid-19 pandemic, and the final weeks of the Trump presidency, notorious oil companies are attempting to ram through two massive tar sands pipelines that will force global banks to make clear choices in the coming weeks and months that will test the seriousness of ‘Paris alignment’ and ‘net zero’ commitments made recently by banks. The banks facing the highest scrutiny for these projects by climate and Indigenous advocates include Citi, Wells Fargo and TD.
Enbridge’s Line 3 and TC Energy’s Keystone XL pipelines each face determined resistance by Indigenous groups and organizations across the climate movement for the immense carbon pollution they would cause and the threats they pose to Indigenous land rights and livelihoods. The Line 3 battle in particular has strikingly similar ingredients to the controversial Dakota Access Pipeline (DAPL), including the same primary financial backers and reputational risks for banks, that made the DAPL pipeline fight into a historic showdown at Standing Rock in 2016-17.
Both pipelines will force global banks to make clear choices in the coming weeks and months:
- Enbridge secured final permits for Line 3 from Minnesota and the federal government in November 2020. Enbridge has started initial phases of construction, despite Covid-19 risks and regardless of outstanding legal challenges and sustained Indigenous-led opposition to the project. Without any project finance associated with the pipeline construction, the banks providing Enbridge’s general corporate financing are the supporters of this destructive project. Will they step away from this high-risk project by not renewing any of Enbridge’s $12.87 billion in credit facilities when they come to maturity, with an initial opportunity to cut ties coming as soon as March 2021?
- TC Energy is in the process of securing a $4.2 billion project loan to finance construction of Keystone XL beginning in January 2021, ahead of the inauguration of a new U.S. presidential administration that has promised to veto the pipeline. Which banks will join the project loan syndicate, despite the strong political winds against it? Will TC Energy’s current bankers endorse ramming through Keystone XL?
A new briefing by Rainforest Action Network outlines the impacts of these projects and details bank support for the companies behind them.
“At upcoming decision points these banks will decide whether they will sink their money into potential stranded assets, support infrastructure that will ignite a carbon bomb, back projects that will lead to severe reputational risk akin to the Dakota Access Pipeline, and endorse a disregard for Indigenous rights — or cut ties with these projects and help move our economy away from its deadly dependence on fossil fuels,” said Jason Disterhoft, senior energy and finance campaigner with Rainforest Action Network.
During the last days of November, Enbridge cleared its final remaining regulatory hurdles and was granted the Minnesota state and federal permits needed to begin construction on Line 3. There is longstanding Indigenous-led resistance to the pipeline in the state, centering on Enbridge’s failure to secure free, prior and informed consent, with significant non-Indigenous activism in solidarity. The resistance movement is gearing up to respond to any further construction by Enbridge in the coming days and weeks, with multiple actions and arrests already occurring at construction sites this past two weeks. Minnesota and Enbridge have been armoring up, with law enforcement response likely to be very militarized.
In its basic outline, the situation is quite similar to the resistance that occurred at the Standing Rock Sioux Reservation for the DAPL pipeline.
“Astonishingly, the very same banks that got burned by leading finance on the DAPL project loan at Standing Rock are the biggest backers of the Line 3 pipeline too,” said. “At its 2017 AGM, Citi said they wish they could have a redo on DAPL. Now they got one and they’re doing it all over again,” continued Disterhoft.
In August, Citi CEO Corbat said “Banks must have the courage to walk away from deals that are bad for the climate”. TD just committed to net zero by 2050.
Leads on the DAPL project loan were Citi, TD, MUFG and Mizuho.
For Enbridge (and therefore Line 3):
- Top bank: TD
- Top US bank: Citi
- Top banks outside North America: MUFG and Mizuho
In October 2020, forty Indigenous women leaders wrote to more than seventy CEOs of banks and other financial institutions calling on them to end support for the expansion of the tar sands oil industry via pipeline financing, in light of its Indigenous rights, environmental, and climate impacts.