🕒 Last updated on August 12, 2025
America’s biggest banks are cutting back their financial support for oil, gas, and coal projects.
Lending to Fossil Fuels Drops Sharply in 2025
So far this year, the nation’s six biggest banks have cut back on financing for fossil fuels by almost 25% as compared to the same time in 2024. That equals around $73 billion in loans and investments in 2025, down from about $97 billion last year.
The pullback is not the same for every bank. One large lender reduced its funding for fossil fuels by over 50%. Another reduced its support by just 7%. Wells Fargo remains the biggest fossil fuel financier so far this year, with $19.1 billion in loans and investments, which is still 17% less than in 2024.
These are not small moves. They show a clear change in how money is being directed. What makes this even more striking is that it is happening despite strong political pressure to keep financing fossil fuel companies.
Political Push vs. Market Realities
The federal government has openly supported the oil, gas, and coal industries. Rules aimed at cutting pollution have been rolled back. New drilling rights have been encouraged. They have even cautioned banks against shutting down fossil fuel industries. Some state governments in oil-producing regions have taken similar steps, even putting penalties on banks that reduce lending to the sector.
⚡ China Shocks the World with 260m Blade Giant—Biggest Wind Turbine Ever Built
Yet, despite these messages, the biggest U.S. banks are moving in the opposite direction. Their decisions are being driven by market forces, not politics.
Fossil fuel projects face many challenges. Prices for oil and gas can swing wildly. Future government rules could make these projects more costly or less profitable. Around the world, more countries are moving toward cleaner forms of energy, such as wind and solar power. This means new fossil fuel projects could become outdated before they even pay for themselves.
At the same time, interest rates have risen. As a result, financing becomes more costly, raising the price of major energy projects. Investors are also pushing banks to focus on projects that bring steady returns, rather than risky bets on long-term fossil fuel developments.
By contrast, clean energy projects—such as building new power grids, battery factories, and renewable energy plants—are seen as more in line with where the world is headed. For banks, financing these projects may offer more growth and fewer long-term risks.
The drop in financing is being felt across every part of the fossil fuel value chain.
Hottest Month, Highest Costs: How Climate Extremes in July 2025 Shook the Global Economy
In the upstream sector—where oil and gas are first explored and produced—smaller companies are hit hardest. They drill new wells primarily with bank loans. Without enough funding, many will slow down drilling or look to merge with bigger companies. Large producers have more options, as they can use their own profits or issue bonds, but even they are showing caution and not rushing to expand.
In the midstream sector—responsible for moving oil and gas through pipelines, terminals, and export facilities—projects often require large syndicated loans from multiple banks. With tighter lending, only the most certain and profitable projects are moving forward. This means fewer new pipelines or export terminals are being built.
Impact Across the Energy Industry
In the downstream sector—where crude oil is refined into gasoline, diesel, and other fuels—capacity remains flat at around 18.4 million barrels per day. No new major refineries are being built in the U.S. Some existing facilities are being converted to process biofuels instead of crude oil. Others are closing. Banks are avoiding funding new refineries, which could be underused in the future as demand for fossil fuels falls.
Coal production is also continuing its long-term decline. Large mines are closing, and no new ones are opening. Although it was once a major component of the American energy grid, coal is currently losing money.
So far in 2025, U.S. oil and gas production may still grow slightly compared to last year, but financing cuts are already limiting new development. Many companies are now paying for projects out of their existing cash reserves instead of taking on new loans. This limits how quickly they can grow. In contrast to previous booms, rig counts are stable and have not increased much.
🧯Global plastic crisis ‘worse than fossil fuels’ — $1.5 trillion peril is killing humans and planet
Limited capacity is limiting production during refining. For now, consumers are still getting the fuel they need, but the system is less able to handle sudden spikes in demand. This could make fuel prices more sensitive to market changes.
On a global scale, the action taken by American banks is a component of a larger trend among Western financial institutions. Numerous European banks have already reduced their loans for fossil fuels and have gone even farther. Oil-producing countries’ state-backed lenders and some private investors looking for rapid returns are filling some of the void left by the fall in Western finance.
Meanwhile, there has been a sharp increase in investment in sustainable energy. In 2024, the world spent about $2 trillion on renewable power, electrification projects, battery storage, and grid improvements—well above the amount invested in oil, gas, and coal. This trend shows that the biggest pools of money are moving toward energy systems based on electricity rather than burning fossil fuels.
The fact that this is happening despite strong political pressure shows that market signals are powerful. Banks are making decisions based on risks, returns, and where they believe the energy market is heading.