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October 30, 2014
Contrasting Views on the Financing of Coal
    by Robert Kropp

Rainforest Action Network congratulates US investment banks for backing away from Australian coal export terminal, while BankTrack reports that $83 billion was provided by banks to finance coal mining and coal power projects.


Climate deniers on the Republican side of the aisle in the US Congress have repeatedly derided President Obama for his so-called “war on coal,” conveniently ignoring the fact that coal is responsible for almost half of global greenhouse gas (GHG) emissions. But if the worst effects of climate change are to be avoided, reliance on coal will have to end.

The usual suspects are obvious. The environmentally destructive practice of mountaintop removal, and the construction of new coal-fired power plants, continue despite the impact both practices have on climate change. But both mountaintop removal and coal-fired power plant construction are extraordinarily expensive; so where do operators get their financing?

From banks, of course, and in many cases from the very banks that proclaim their commitments to sustainability through such initiatives as the Equator Principles and the Carbon Principles. In its latest report, the Dutch nongovernmental organization (NGO) BankTrack illuminates the degree to which banks continue to fund coal projects despite, in many cases, the sustainability rhetoric they employ.

BankTrack's finding that between 2005 and April, 2014, banks provided more than $500 billion in coal financing is sobering enough. But it gets worse: “2013 was a record year for coal finance,” the NGO reports, “with commercial banks providing more than 88 billion dollars to the main 65 coal companies – over four times the amount provided in 2005.”

The Number One offender? JPMorgan Chase, which between 2005 and April, 2014, provided $27 billion in financing of coal projects. The bank has been a member of the Equator Principles since 2006, and is a signatory to the Carbon Principles as well.

“Commercial banks must stop bankrolling climate change by ending support for new coal extraction and delivery projects, as well as for new coal-fired power plants,” BankTrack states. The NGO also advises that banks “calculate and disclose the financed emissions associated with their loans, investments and other financial services.” According to the Greenhouse Gas (GHG) Protocol and the UNEP Finance Initiative, “only six percent of financial companies in the FTSE Global 500 reported any emissions associated with lending and investment portfolios to CDP” in 2013.

There are a few bright spots. Earlier this year, the Infrastructure Partners unit of Goldman Sachs “sold off its remaining equity investment in Carrix, the parent company of Pacific International Terminals and SSA Marine that are behind a colossal coal export terminal proposal near Bellingham, Washington,” BankTrack reported. And Rain forest Action Network (RAN) reported this week that major US-based investment banks have made written commitments not to finance the Abbot Point coal export project in Queensland, Australia.

Citigroup, Goldman Sachs, and JPMorgan have joined a number of major European banks in declining to bankroll the environmentally destructive project, RAN stated.

“We’re pleased to see some of the biggest banks on Wall Street reject this destructive project that presents a grave threat to the Great Barrier Reef and to the global climate,” said RAN Climate and Energy Program Director Amanda Starbuck. “These banks have clearly taken a good look at the Abbot Point plan and decided that dredging a World Heritage Site to make way for coal ships is obviously a terrible idea.”

At this point, Bank of America—the sixth-largest financier of coal projects, according to BankTrack—has not made a similar commitment, despite its oft-stated support for a transition to a low-carbon economy.

“It’s unbelievable that in the midst of a climate emergency, Bank of America would even consider bankrolling a carbon bomb on the scale of the Alberta tar sands,” Starbuck of RAN said. “Abbot Point poses an immediate threat to one of the world’s most diverse ecosystems, the Great Barrier Reef. Bank of America needs to join the rest of its peers by rejecting this terrible project immediately.”

 

 
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