Climate Bonds Initiative rejects idea that coal companies could use the green label to raise finance
By Megan Darby
Could the coal sector raise money through green bonds? That question will be raised at an industry conference in Denmark next month.
Tom Kearney, managing director of Connect Capital Partners, is to give a presentation entitled: Green bonds and the coal industry – A new frontier?
The Climate Bonds Initiative was quick to rule out any labelling of coal bonds as “green”, however.
Beate Sonerud, policy analyst for the green finance think-tank, said in a blog that any investment in “clean coal” would lock in coal use for years to come.
That is incompatible with effective climate action, she argued.
Green bonds are seen as an important way to raise finance for the transition to a low carbon economy.
A small but growing sector of the market, they allow institutional investors such as pension funds to earn stable returns while promoting green growth.
To date, they have supported initiatives in public transport infrastructure, improving energy efficiency and renewable energy.
French development bank AFD last week issued a €1 billion bond to support projects that can produce measurable greenhouse gas emissions cuts.
Speaking yesterday, UN secretary general Ban Ki-moon said raising awareness of green bonds was one of his five priorities for his climate leaders meeting, which takes place in New York next Tuesday.
Kearney, who could not be reached for comment, appears to suggest investment in so-called “clean coal” technology could be marketed in the same way.
While new technology can reduce emissions of some harmful gases, burning coal still produces carbon dioxide, which adds to global warming.
According to leading scientists, continued coal use will lead to catastrophic climate change.
In a statement released last December, 27 climate and energy experts from around the world said coal use must decline to keep warming to 2C above pre-industrial levels. That is the politically agreed “safe” threshold.
Even the most efficient coal power stations cause more than double the carbon dioxide emissions of efficient gas-fired plants, they noted. And the only way coal can be part of a low carbon future is with carbon capture and storage (CCS).
CCS is some way from being a commercial proposition, with only a handful of large scale projects under way worldwide, backed by substantial public funding.
The increasing political pressure to tackle climate change by cutting carbon emissions is taking its toll on the coal sector.
The Carbon Tracker Initiative has warned some 80% of known fossil fuel reserves must stay in the ground to avoid dangerous warming.
The think-tank is due to release a report on Monday flagging up the climate risks of investment in coal.
Shares in Peabody Energy, the world’s largest private coal company, have slumped by three quarters since a peak in 2011.
Against that backdrop, coal producers are increasingly playing on the low cost and potential energy security benefits of their product.
A campaign by Peabody presents coal as a solution to “energy poverty” in developing countries.
At next month’s Coaltrans conference, Peabody chief executive Greg Boyce will give a keynote speech on “making black the new green”.
That goes against the strategy of development banks, which are moving away from financing coal plants, in recognition of their damaging effect on the climate.
And a recent Peabody advert was banned for its promotion of “clean coal” – a phrase the UK watchdog said was misleading.
Consumers were likely to think “clean coal” did not produce carbon dioxide emissions, which is not the case, the Advertising Standards Authority ruled.