December 02, 2011
BankTrack Names Banks Funding Dirty Coal Power Plants
by Robert Kropp
Four US banks top the list of those spending the most on financing the construction of new
coal-fired power plants.
"We all know that climate change is happening."
Thus begins an important new report from
BankTrack, a Netherlands-based
nongovernmental organization (NGO). The burning of coal is one of the most significant contributors
to climate change, responsible for as much as 80% of global greenhouse gas (GHG) emissions.
The construction of new coal-fired power plants is an expensive proposition as well. On
average, the cost of a new plant is about $2 billion. Such projects obviously require bank
financing; but financial institutions that are signatories to the the Equator Principles commit to managing environmental
and social risks in their project finance transactions.
A comparison of those banks named
in BankTrack's new report as providing the most financing of coal-fired power plant construction
with those that are designated as Equator Principles Financial Institutions (EPFIs) reveals
inconsistencies, to say the least. And banks headquartered in the US, several of which are EPFIs,
are among those whose inconsistencies are the most pronounced.
Leading the list of 93 of
the world's leading banks are four from the US. Since 2005, financing of the construction of
coal-fired power plants by JPMorgan Chase has exceeded $22 million. Following closely behind
JPMorgan Chase are Citigroup ($18.6 million), Bank of America ($17 million), and Morgan Stanley
($16.4 million). Of the four banks, all but Morgan Stanley are signatories to the Equator
The report incorporates statements from the sustainability reports of the
banks, which bring the inconsistencies between policy and performance into even sharper relief. For
instance, the sustainability report of JPMorgan Chase states, "Helping the world transition to a
low-carbon economy," while Citi proclaims itself the "most innovative bank in climate change."
"The fact is that while banks are employing a lot of 'climate speak', this is more or less a
smoke screen to continue their financing of the coal industry," the report states.
financing for new construction by the 93 banks since 2005 has totaled $313.5 billion. Furthermore,
the report points out, financing for the coal industry in 2010 was almost twice as high as it was
If all new coal-fired power plants now scheduled for construction come on line,
the report warns, their lifetime emissions will equal those of all coal-burning activities since
the beginning of industrialization.
"Banks need to end support for new coal extraction and
delivery projects," the report concludes. "Continuing to finance new coal-fired power plants that
will emit huge amounts of CO2 over the coming decades is irresponsible."