Green groups are calling on major banks to stop financing a dash for coal by Czech firm EPH.
BankTrack, E3G, urgewald and Sandbag wrote to nine institutions that have helped raise €3 billion since 2012 for an acquisition spree across Europe.
This bet on a future for polluting assets undermines EU climate policy, they told funders including Citibank, HSBC and JP Morgan.
“EPH’s business strategy is clearly geared towards prolonging and intensifying coal power generation and mining in Europe, which will inevitably lead to increased CO2 emissions,” the NGOs write.
“At best, EPH is betting on collecting taxpayer subsidies through capacity markets or similar schemes to make their investments pay off.
“At worst, they could be looking to actively undermine emissions reduction efforts to keep their coal investments profitable, without any intention of paying the very high land reclamation costs related to lignite [brown coal] mining.”
They urge the banks not to refinance the firm or advise it on any further transactions.
The appeal to financiers follows an unsuccessful attempt to block EPH’s most high profile purchase: five opencast coal mines and four power stations in Germany.
Campaigners implored the Swedish government to prevent state-owned utility Vattenfall from selling the operations, instead taking responsibility for closing them down. Even Al Gore weighed in.
Their hopes were dashed on Saturday, when ministers approved the deal, paving the way for completion by the end of August.
“This was a really great chance to have a politically negotiated settlement on socially acceptable coal phaseout,” said Julian Schwartzkopff, researcher at think tank E3G. “The chance has been lost, but the issue is not going away.”
The EU has signed up to slash greenhouse gas emissions 80-95% by 2050, in line with international efforts to hold global warming below 2C.
Yet many member states are reluctant to crack down on the most polluting fossil fuel.
A recently leaked draft showed Germany is shying away from a timetable to end coal power generation. It is a contentious issue, ahead of a general election year, with certain trade unions vocally opposed.
The UK promised to burn its last unabated coal in 2025, but that has not stopped a new mine winning a permit on Tuesday to run until 2024.
To further confuse the picture, some offer incentives for coal plants to stay on the system, to ensure supplies when renewable generation dips.
EPH and a handful of other investors – Australian financial group Macquarie, Czechia’s CEZ and Poland’s PGE – are aiming to wring the last drop of value out of coal.
Founded seven years ago, EPH has picked up fossil fuel assets in Slovakia, the United Kingdom, Germany, Italy and the Czech Republic.
It is on course to become Europe’s third most polluting utility, the NGOs calculate, with annual emissions of 82 million tonnes – roughly equivalent to Austria’s carbon footprint.
A number of banks are reducing their exposure to carbon intensive industries, in light of the risk they will lose value as the global economy goes green.
Brendan McNamara, head of NGO engagement at HSBC, declined to comment on EPH directly, citing client confidentiality.
But he told Climate Home the company had increased support for renewable energy and restricted finance for deforestation and coal fired power stations.
“Banks have a role to play in combating climate change, and HSBC will certainly play its part,” said McNamara.