Trump factor drives fossil fuel financing to record high, with $508 billion flowing to expansion projects.

Trump Factor to Blame for Record $508bn Fossil Fuel Expansion, Say Activists

In 2025, despite some banks pulling back, the world's 65 largest banks still provided a total of $906 billion in financing to fossil fuel companies, an increase of 8% compared to 2024. Of this, a record $507 billion went directly to oil, gas, and coal capacity expansion projects. The newly released 17th annual "Banking on Climate Chaos" report points out that the Trump administration's "anti-climate" agenda has weakened banks' incentives to reduce fossil fuel financing, becoming the main driver of this trend.

The report, jointly published by non-profit organizations such as the Rainforest Action Network and BankTrack, tracks financial support from the world's major banks to the fossil fuel industry. The data shows that despite growing calls for global energy transition, capital is still flowing heavily into fossil fuel expansion, running counter to the temperature control goals of the Paris Agreement.

Industry Background: The "Countercurrent" of Global Energy Finance

2025 is a critical juncture for the global energy transition. The International Energy Agency (IEA) previously stated that to achieve net-zero emissions by 2050, global fossil fuel investment would need to be reduced to less than one-third of current levels. However, reality is moving in the opposite direction: total bank financing for fossil fuels has risen for three consecutive years.

The report shows that since the signing of the Paris Agreement in 2016, the world's major banks have provided a cumulative total of over $6.9 trillion in financing to the fossil fuel industry. Among them, U.S. banks became the largest fossil fuel financiers in 2025, with institutions such as JPMorgan Chase, Citibank, and Bank of America all ranking in the top ten. Although European banks have pledged climate transition, BNP Paribas, HSBC, and others are still expanding support for liquefied natural gas projects.

Current Development Trends: Direct Link Between Trump Policies and Financing Surge

In 2025, after returning to the White House, the Trump administration swiftly overturned a series of climate policies: withdrawing from the Paris Agreement, revoking methane emission limits, opening more federal lands for oil and gas drilling, and relaxing environmental reviews for project financing. The report's authors note that these policy changes sent a clear signal to financial markets: the government will actively support fossil fuel expansion, and banks need not worry about regulatory penalties.

Specifically, bank financing for fossil fuel expansion projects reached $507 billion in 2025, an increase of 15% from 2024, far exceeding other uses (such as maintaining existing capacity or debt restructuring). The share of expansion financing rose from 53% in 2024 to 56%, indicating that banks are not only maintaining existing operations but are actively betting on the growth prospects of fossil fuels.## Impact on the Energy System: Carbon Lock-in Effect and Transition Delay

This massive financing will generate a strong "carbon lock-in" effect. Newly approved oil and gas fields and coal mines typically have a production cycle of 20-30 years, meaning that even if policies shift in the future, these assets will still emit large amounts of greenhouse gases. According to the report's estimates, the projects supported by financing in 2025 will generate approximately 53 billion tons of CO2 equivalent emissions over their lifetime, equivalent to 1.5 times the global annual emissions.

At the same time, the growth rate of clean energy financing is relatively slow. Although renewable energy investment also reached a new high in 2025 (about $800 billion), the scale of bank financing for fossil fuels is still far higher than direct project financing for clean energy. This exacerbates the structural contradiction in energy system transformation: on one hand, policy commitments and investment flow to clean energy; on the other hand, the financial system continues to provide ammunition for fossil fuel expansion.

Challenges Faced: The Gap Between Bank Commitments and Actions

The report reveals a huge gap between banks' climate commitments and actual actions. More than 100 banks worldwide have joined the Net-Zero Banking Alliance (NZBA), committing to achieving carbon neutrality in their portfolios by 2050. However, data from 2025 show that NZBA member banks still account for more than 70% of global fossil fuel financing, with no clear downward trend.

Banks mainly face three pressures: first, short-term profit demands from shareholders and governments—fossil fuel projects yield high returns when energy prices are high; second, political uncertainty—the Trump administration's policies make it harder for banks to predict regulatory direction; third, a lack of unified data disclosure standards, allowing banks to "greenwash" their financing activities.

Future Outlook: Energy Transition Faces Financial "Pincer Attack"

Looking ahead to 2026 and beyond, whether fossil fuel financing can decline depends on multiple factors. If the Trump administration continues to maintain anti-climate policies, banks may further increase their investment in fossil fuels until the next election in 2028. But on the other hand, climate policies in regions such as Europe and Japan are still tightening. The EU's Carbon Border Adjustment Mechanism (CBAM) and the International Maritime Organization's (IMO) shipping decarbonization regulations may force banks to adjust through market and regulatory pressure.

From a longer time perspective, the global energy structure is still slowly shifting towards clean energy. The IEA predicts that renewable energy will account for more than 50% of global electricity generation by 2030. But the rebound in fossil fuel financing means that as the share of renewable energy increases, the energy system may face more severe asset stranding risks. For investors, banks that continue to fund fossil fuel expansion may suffer greater losses in future climate lawsuits and regulatory actions.

The report concludes by recommending that central banks and financial regulators incorporate climate risks into macroprudential regulatory frameworks and require banks to disclose their exposure to fossil fuel-related risks. At the same time, investors should exert greater pressure on banks through shareholder proposals and divestment actions.

ConclusionThe report "Banking on Climate Chaos" sounds the alarm once again: although the clean energy transition has become a global consensus, the actual flow of financial capital continues to drive the expansion of fossil fuels. The impact of Trump's policies cannot be ignored, but the deeper issue lies in the fact that the global financial system has yet to establish effective mechanisms to translate climate goals into hard constraints on credit decisions. Unless policymakers, regulators, and investors act together, the energy transition will remain trapped in a dilemma of "disconnect between rhetoric and capital."