Banks invest record €66bn in coal sector

Private banks are stepping in to finance coal mines and power stations as development banks divest, finds BankTrack

A mountaintop coal mine in West Virginia, US (Pic: Flickr/Dennis Dimick)

A mountaintop coal mine in West Virginia, US
(Pic: Flickr/Dennis Dimick)

By Megan Darby

Commercial banks poured record sums of money into coal last year, despite mounting evidence of the climate risks.

Banks provided more than €66 billion (US$88 billion) worth of underwriting and loans to 65 top coal companies in 2013, according to the latest report by BankTrack. That was a fourfold increase on 2005.

In the last three years, Chinese banks overtook Western counterparts Citi, JP Morgan Chase and RBS to reach the first three spots in the coal backing leaderboard.

Yann Louvel, campaign coordinator at BankTrack, said these banks were throwing a “lifeline” to coal mining and power companies, while putting the planet in “climate jeopardy”.

The top 20 coal banks include eight out of nine praised by the Rainforest Action Network last week for not investing in Australia’s controversial Abbot Point project.

While they may be avoiding that particular coal port expansion, the BankTrack data shows these banks are still heavily involved in backing coal.

(Source: BankTrack)

(Source: BankTrack)

Banks should be “deeply ashamed” to top this chart, said Alex Scrivener, policy officer at the World Development Movement.

“Any notion of ‘ethical banking’ is incompatible with financing an energy source like coal.”

REPORT: World Bank chief backs fossil fuel divestment drive

The rise in funding from commercial banks comes as many development banks are moving away from coal projects, in recognition of their climate impacts.

Campaigners are starting to put pressure on high street banks to follow suit, as part of a growing fossil fuel divestment movement.

Lucie Pinson, private finance campaigner for Friends of the Earth France, said the latest findings would “help galvanise” public enthusiasm for divesting from coal.

It exposed a “huge disconnect between banks’ hype about their clean energy investments and aspirations, and their huge, still growing and much less talked-about support for dirty coal,” she said.

COMMENT: Why you should read the IPCC synthesis report

A UN climate science report due out this Sunday is expected to reinforce the importance of slashing carbon dioxide emissions to avoid catastrophic global warming.

Coal is the most emissions-intensive fuel for power generation. It is also often the cheapest. Coal use has grown 4% a year in the last decade, according to the International Energy Association.

Scientists at Climate Action Tracker project that phasing out the dirty fuel by 2050 would prevent 0.5C of temperature rise.

Private banks’ rising support for coal is “shocking” in light of the UN’s findings, said Heffa Schücking, director of German environment group Urgewald.

She urged them to follow the World Bank’s example and “quit coal for good”.

Analysts have warned that coal is not only bad for the climate, but financially risky.

The Carbon Tracker Initiative found some US$112 billion of planned coal projects were vulnerable to slow demand growth.

In July the UK’s Law Commission said fund managers had a “fiduciary duty” to take into account the long term environmental and social risks of their investments.

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