With the climate-and-energy-focused Inflation Reduction Act expected to be signed by President Joe Biden this week, The Wall Street Journal asked Dealogic to analyze the amount of money being loaned to “green” companies and to oil and gas companies. Investors, WSJ concludes, aren’t ready to give up on fossil fuels.
But the data suggests that they’re starting to pull back already.
Fossil fuel financing has been more or less steady since 2015, when the WSJ/Dealogic data series begins. For oil and gas companies, that should be a worrying trend given overall low rates and the amount of money that’s been sloshing around the market the past few years.
Investment-grade bond issuance surged in 2020 before dropping to still-elevated levels in 2021. Yet fossil fuel investment didn’t follow the trend, dipping slightly instead of rising along with the market.
Bonds and loans for renewable projects and companies did the opposite, ticking steadily upward from 2015 on. In 2021, they more than doubled the previous year, matching the amount invested in fossil fuels for the first time.
This year, renewable companies remain neck-and-neck with oil and gas companies.