Report Finds Top Banks Moving Away From Coal

Published by MAC on 2014-04-17
Source: Statements, Liberation

Report Finds Top Banks Moving Away From Coal: Citigroup and Barclays seen as laggards

Fifth annual coal finance report shows JPMorgan Chase and Wells Fargo end financing for mountaintop removal coal

Rainforest Action Network (RAN), Sierra Club and BankTrack press release

17 April 2014

San Francisco - Today, Rainforest Action Network (RAN), Sierra Club and BankTrack released the fifth annual coal finance report card, "Extreme Investments, Extreme Consequences," which tracks the financiers of the worst-of-worst coal companies. The report shows that even as high-profile bankruptcies and costly environmental cleanup settlements illustrate the growing risks involved with lending to coal companies, U.S. banks provided $31 billion in financing for coal in 2013.

The report ranks Citigroup as the top financier of the U.S. coal-fired power plant fleet with $6.5 billion in loans and underwriting, and Barclays as the lead financier of mountaintop removal (MTR) coal mining. Meanwhile, a positive trend is also developing as Wells Fargo and JPMorgan Chase both committed to end their financial relationships with major MTR coal mining companies; both achieved the highest grade in the report card's five-year history. Goldman Sachs also received recognition for stepping away from the contentious Gateway Pacific Coal Export Terminal proposal in the ecologically sensitive Puget Sound. Citigroup, Bank of America, Morgan Stanley and PNC Financial all received lower grades than in 2013 for their continued financing of MTR.

"The gap is widening between banks who have cut ties with extreme coal companies and those still holding on to those risky relationships," said Ben Collins, Campaigner for Rainforest Action Network's Energy and Finance Program "Leading banks are beginning to plan for a carbon constrained future by moving away from companies that contaminate public water supplies, threaten our climate, and increasingly put shareholders at risk. At this point any company still banking on coal has its head in the sand."

This year, the report emphasizes the coal industry's impact on water contamination, including a case study investigating the ten lawsuits filed against Alpha Natural Resources for selenium pollution from MTR mines. Case studies in this year's report also expose coal industry bankruptcies and risky coal power plant transactions, including bankruptcies at MTR coal producers Patriot Coal and James River Coal, and sales of coal plants involving Dynegy in Illinois and Dominion Energy in Massachusetts.

"Mountaintop removal coal mining is destructive not only to the environment but to the economy and health of Appalachians as well," said Mark Kresowik, a policy analyst for the Beyond Coal Campaign at the Sierra Club. "Over the last year financially prohibitive fines and settlements like those against Arch Coal and Alpha Natural Resources show that MTR is an awful investment for the American banking industry."

The report urges banks to plan for a carbon-constrained future. Specific recommendations include phasing out lending to producers of mountaintop removal coal and coal-fired power, withholding financing for new coal export terminals and ensuring that coal financing deals commit banks and companies to emissions reductions.

The full report can be found online at: http://ran.org/extreme-investments-extreme-consequences

Further information and interviews
Kerul Dyer, kdyer[at]ran.org, +1 415-866-0005
Sean Sarah, sean.sarah[at]sierraclub.org, +1 202 548-4589

About BankTrack
BankTrack is the global network of civil society organizations targeting the operations and investments of large, international operating commercial banks

About Rainforest Action Network
Rainforest Action Network campaigns to break America's oil and coal addictions, protect endangered forests and Indigenous rights, and stop destructive investments around the world through education, grassroots organizing, and nonviolent direct action

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Société Générale is breaching its own standards in backing massive, risky Queensland coal project, study finds

Friends of the Earth France Press release

15 April 2014

Paris - Société Générale's support for the huge Alpha Coal mining project does not comply with its own environmental and social principles (1). This is the conclusion of a study released today (2) by Friends of the Earth France that assesses the project's risks to biodiversity, water resources, the Great Barrier Reef and the climate. These risks should not be ignored and the project cannot continue as it is now, as the Land Court of Queensland confirmed on April 8th (3). Société Générale must withdraw its support immediately.

Friends of the Earth has since September 2013 alerted Société Générale of risks connected with Alpha Coal (4), a huge mining project in the Galilee Basin in the state of Queensland in Australia. Today, the NGO publishes a comparative analysis (2) of the project's impacts and the principles adopted by the bank to ensure social and environmental responsibility. Biodiversity, critical habitats, water resources, the Great Barrier Reef, the climate: the study sifts through all project impacts and the verdict is clear: for Friends of the Earth, Société Générale must withdraw immediately from Alpha Coal if it is serious about its CSR commitments.

"The bank ensured us last November that it would only engage in Alpha Coal if the project meets its environmental and social principles, yet it is clear that the two are irreconcilable as project risks are enormous," says Lucie Pinson, private finance campaigner for Friends of the Earth. "The Land Court of Queensland itself recognized early April (3) that the project could not be approved without considering the impact it would have on water resources on which people and farms in the region depend, and which also feed the Great Barrier Reef " adds Derec Davies, from the local environmental association Coast and Country.

The association, which challenged the authorization of the mining project together with local farmers, welcomes this victory, but now must await the decision of the Queensland Government, which could follow the recommendations of the Land Court, but is also free to ignore them and give a green light to Alpha Coal. The project would then become the first of nine mining projects in the Galilee Basin to obtain all necessary permissions. "If the court's opinion is respected, the project should either be buried or provide additional studies on the use of water. However, the state of Queensland is known for mining (5) and the Minister Cripps could intervene on behalf of the company and approve the mine now," continues Derec Davies.

"The fact that the Land Court is in favour of the precautionary principle and is putting a halt to a project that was approved two years ago by the state of Queensland and the government of Australia also reveals major institutional failures in the bank's risk management. Also, the fact that environmental issues were not considered as they should have been from the start of project, particularly when they impact a World Heritage Site, jeopardizes the reputation of investors and their future profits. The fact that Blackrock, the largest fund manager in the world, is threatening to divest from companies involved in the destruction of the Great Barrier Reef, demonstrates an awareness and an unprecedented movement from investors. (6) We once again call on Société Générale to withdraw from this project, and we are now launching an international petition against the bank's support for fossil fuels," concluded Lucy Pinson (7).

NOTES
(1) Société Générale is a signatory to the Equator Principles and defined General Environmental and Social Principles to control the impacts of the activities it supports. These principles are set out in sector policies, including those on mining projects, as well as a cross-cutting policy on biodiversity, available on this page.
(2) The study, "Alpha Coal project & Société Générale's Environmental and Social General Guidelines", is available in English at the bottom of this page.
(3) The decision is available on this page.
(4) More information on this page on the BankTrack website.
(5) The governments of Queensland and Australia strongly support the mining industry and coal mining in Queensland, whatever the environmental, social and climate consequences. The Queensland Government has declared itself in favour of a simplified authorization procedures for coal projects, particularly with regard to environmental impacts in order to accelerate them. The Queensland Premier said in June 2012 that the state was "in the coal business"; the Minister of the Environment and Heritage Protection Queensland also stated that environmental associations are extremists whose views should not be heard; and the Queensland Minister of the Environment himself even said he was not convinced that the emissions of greenhouse gas emissions caused by humans were causing climate change. Finally, members of the authority responsible for the protection of the Great Barrier Reef also have interests in the mining and gas industry.
(6) Bloomberg article available on this page.
(7) Petition in partnership with 350.org for the end of the support of coal by Société Générale and its immediate withdrawal from the Alpha Coal project, available In English on this page.

Further information and interviews
Caroline Prak - +33 6 86 41 53 43 - caroline.prak[at]amisdelaterre.org - www.amisdelaterre.org

About BankTrack
BankTrack is the global network of civil society organizations targeting the operations and investments of large, international operating commercial banks

About Les Amis de la Terre
Les Amis de la Terre France is a federation of grassroots local associations campaigning for the environment and for sustainable societies.

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Societe Generale goes for coal in the Australian bush

By getting involved in a mine project, the French bank provokes the ire of an environmental NGO

By Amandine Cailhol

Liberation

16 April 2014

In the middle of the Australian bush, in Queensland, the Indian company GVK, associated with the national business Hancock, is preparing to build a coal mine. Alpha Coal, that is the name of the project, will extend over 60,000 hectares and will be coupled with a railway line and a port extension. A gigantic project with high environmental impact that attracted Societe Generale, committed to the conglomerate for an advisory mission.

For the NGO Friends of the Earth, the project is "inconsistent" with the principles of the bank. In a study published today - that Libération reports exclusively - the association compares the risks of the project and the social and environmental responsibility policy of the bank. Its conclusion is clear: "Societe Generale must withdraw immediately from Alpha Coal, if it is serious in its commitments."

Friends of the Earth, which is very involved in the hunt for dubious investments, private as well as public, had already alerted the bank: "With 1.927 billion euros in coal mines between 2005 and mid-2013, Societe Generale is far from the image of a responsible bank which wants to play a role in this transition, the image it wants to give, " stressed the NGO in a mail to its director in January. An image that could be dented a little more if the bank validates its participation.

Risk

Alpha Coal accumulates difficulties. First grievance: the mine would weigh heavily on the basin water resources. The report estimates that it will be necessary to divert 176 billion volumes of water, equivalent to 70,400 Olympic pools. A level of consumption which would penalize surrounding farmers as well as the 60,000 people living from tourism or fishing. Biodiversity, which is part of Societe Generale commitments, would also be threatened. The report is particularly concerned by the plight of humpback whales, marine turtles, dugongs (marine mammals similar to manatees) and the entire ecosystem of the Great Barrier Reef, already in a poor condition.

According to the projections of the NGO, 508 additional ships would cross the reef each year to load the coal to China and India. Abbot Point would become with Alpha Coal the biggest coal port in the country, and this despite recommendations from Unesco, which advocates for a restriction of port developments and threatens to include the Great Barrier Reef on the list of World Heritage Sites in Danger.

"The project is also catastrophic in terms of greenhouse gas emissions", adds Lucie Pinson, campaigner for Friends of the Earth. Over thirty years, the mine is expected to produce 1.8 billion tons of CO2. More than Finland, Portugal or Sweden. Irony of the calendar, at the same time, the Intergovernmental Panel on Climate Change (IPCC) announces a rise in temperature from 3.7°C to 4.8°C by 2100 without major changes in the energy mix (see page 17).

The fight against global warming is yet another sensitive point in Societe Generale's commitments. But its principles have limits. If the bank ensures it "has a role to play in the transition to a lower carbon economy", it also believes that "in the near future, coal-fired electricity production will continue to be part of the energy mix of many countries" and therefore wishes to remain " a reference partner for its customers in this sector. "

"Hypocrite"

Contacted by Liberation, the bank remains discreet about its involvement, limited to "advisory financing", and stays cautious. "We will do nothing that is not consistent with our principles and respect the decisions of the State of Queensland and of Australia, " the press service swears. A speech that does not reassure Lucie Pinson, from Friends of the Earth: "Their principles are very limited and leave the door open to free interpretation. This is a hypocrite system." As for the reference to Australian authorities, it is 'laughable' according to Lucie Pinson, which emphasizes the conservatism of the country in its climate policy.

The NGO is not the only one to ring the alarm bell. Authorized at the federal level in 2012, the project is since then challenged by local associations which took it to the Land Court. The latter, in its decision made public in early April, has refused to validate the project as it is now and demanded improvements in environmental terms. But these activists are afraid this is not enough. "Australia has clearly chosen coal" says Lucie Pinson, annoyed, who fears that Alpha Coal "could open the way for eight other huge projects planned in the basin."

It remains that economic factors could threaten the project, in a rather gloomy context for the sector. The decision of the US bank Citi to withdraw from the program, as well as the announcement of Crédit Agricole and BNP Paribas to stay away from it, suggests that Alpha Coal is perhaps not a very profitable project. And not worth the risk in terms of reputation. Enough to convince Societe Generale to leave the boat? Not so sure. Coal remains promised a very bright future and will become shortly the primary source of energy in the world.

Notes

In Australia, the energy mix is composed by 90% fossil energy and 75% of electricity is produced from coal. The country announced in February its willing to revise its policy in favor of renewable energies, considered inappropriate and very costly for households.

43% This is the proportion of CO2 emissions coming from coal in the total energy produced in the world, according to the EIA.

"French banks have brought more than 4.2 billion euros to the coal mining industry since 2011." Lucie Pinson, Friends of the Earth campaigner.