As the Royal Bank of Scotland announced its interim 6-month profits today
Friday (3 August 2007), NGOs warned that the bank's financing of oil& gas projects may threaten current & future profit margins.Calculations indicate that the bank is carrying unaccounted for currentcarbon liabilities of up to almost £1 billion, over 20% of the bank'sinterim profits.

In2006, RBS' estimated embedded emissions resulting from loans to oil& gas extraction totalled over 43.7 million tonnes carbon dioxide[1]. If costed according to a social price calculated by Sir NicholasStern [2], these carbon liabilities add up to £940 million over sixmonths - equivalent to around 20% of RBS' $5.1 billion interim profits.

Evenat the EU's carbon trading figure [3] – generally recognised as lowerthan the real cost of carbon, due to overly generous permit allocations- internalising these costs would set RBS back £598 million per year.

Thebank's forays into conflict areas bring further risks. RBS is workingto source financing for a $6 billion gas project in the Niger Deltainvolving Shell. The Olokola LNG project threatens to displace localcommunities and cause conflict. The largest rebel group in the NigerDelta, the Movement for the Emancipation of the Niger Delta, hasthreatened "It is inconceivable that […] they can be protected from ourability to sabotage the Olokola facility. We will test the integrity ofthat protective measure." [4]

RBS'insurance divisions have been particularly hard hit by the recentextreme weather events and floods that hit England, widely associatedwith climate change [5], could bring £300 million of claims to DirectLine & Churchill, through which RBS controls 16% of the home loansmarket. [6]

Mika Minio-Paluello of PLATFORM said:

"Unlessthe bank begins to recognise its climate responsibility and take itscarbon liabilities seriously, shareholders may be in for a revenueshock in the future. On its current course, RBS faces a double whammy –greater insurance losses as a result of climate change; and highercosts should Governments impose financial charges to reduce climatechanging emissions."

Duncan McLaren of Friends of the Earth Scotland said:

"RBSseems happy to claim kudos and credit when it funds renewable energyprojects, yet rejects any accountability for the emissions that resultfrom the oil and gas projects it finances. Such double standards cannotbe good for the reputation of Scotland’s biggest business."

Bronwen Thomas of national student network People & Planet said:

"Weare calling on RBS to accept responsibility for the climate impacts ofits lending. Climate change is and will remain one of the biggestissues amongst students."

-ENDS-

[1] "The Oil & Gas Bank", PLATFORM, Friends of the Earth Scotland,
BankTrack, People & Planet, new economics foundation

http://www.carbonweb.org/documents/Oil_&_Gas_Bank.pdf

The methodology attributes funder liability for carbon emissions from
financed projects in proportion to the share of funding provided. The report
does not imply that all emissions of financed projects be allocated to the
bank – merely those corresponding to the proportion financed. The figure of
43.7 million tonnes CO2 is the share of annual emissions from active
projects funded by the bank.

[2] "Stern Review on the Economics of Climate Change"

http://www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_cli
mate_change/stern_review_report.cfm

[3] http://www.pointcarbon.com

At the current €20.25 trading rate for EU carbon allowances,

[4] http://www.unitedijawstates.com/ndpvf.htm

[5]“Gas emissions blamed for downpours” FT 24.07.07

[6] “Banks balance gloom over dollar and floods crises with upbeat results”
Sunday Herald 29.07.07