Coal financing under further scrutiny as funds divest

Published by MAC on 2015-05-05
Source: Statements, Mining.com, Guardian

Bankrolling climate chaos: banks kept coal on life support in 2014

Sixth annual coal finance report card finds global banks pumped billions into coal finance in 2014, despite warning signs of coal's systemic decline

Joint press release

5 May 2015

To download the full report, with 2014 bank grades: http://bit.ly/1IGbSOJ

At a time when declarations about “the end of coal” abound, leading financial institutions have continued to put billions of dollars into coal mining and coal-fired power, despite dire warnings from climate scientists that we must end coal use immediately to avert catastrophic levels of global warming.

Global banks collectively financed $144 billion for coal mining and coal power companies in 2014, according to the annual coal finance report card released today by BankTrack, Rainforest Action Network and the Sierra Club. The findings in the 2015 report card indicate that, despite a dismal long-term financial outlook for the coal industry, banks have thus far been willing to prolong the demise of coal in the service of short-term profits – and at the expense of the global climate.

This year’s report card, entitled “The End of Coal?”, does identify some bright spots in coal finance, with a critical mass of banks saying “no” to particularly destructive coal mining projects and practices, including proposed development of the Galilee Basin in Australia, and mountaintop removal mining in the United States. In addition, in 2014 key financial industry voices concluded that the shift away from fossil fuels has reached a turning point, with Goldman Sachs concluding that coal for power production has “reached its retirement age” and Bloomberg New Energy Finance marking the “beginning of the end" for fossil fuels.

But despite these pronouncements, the end of coal will not come soon enough to limit climate change to internationally-agreed upon safe levels, unless banks act to drastically and rapidly end financing for coal.

Ben Collins, Senior Climate and Energy Campaigner at Rainforest Action Network, said: “Many leading banks have acknowledged that financial institutions have a responsibility to usher in the transition from fossil fuels to renewable energy. Unfortunately, the same institutions that frequently tout their clean energy investments and LEED-certified headquarters are also keeping the coal industry on life support at time when climate scientists tell us we need to leave almost all coal in the ground, starting immediately, if we want to keep climate change to levels compatible with ongoing human civilisation.

“We saw some signs of progress in 2014 with banks steering clear of some particularly egregious mining projects and practices, like Australia’s Galilee Basin and mountaintop removal mining in the U.S. Appalachian region. But unfortunately it’s not enough. We need banks to respond with leadership to the existential threat posed by climate change. Coal will die one way or another, but if banks wait to ditch coal until the market forces them to, the death of coal will come too late for the climate.”

Yann Louvel, BankTrack's Climate and Energy Campaign Coordinator, said: “Looking at the slow evolution of bank policies related to the environmental and climate impacts of their coal financing, this year's report card is showing some positive signs of individual steps forward here and steps forward there.

“However, with time fast running out for proactive climate action to have any meaningful effect, the banks are basically fiddling with their policies while more and more coal burns as a result of entrenched levels of coal financing. It's outrageous for some banks to be hitching themselves to this year's UN climate negotiations in Paris as 'climate leaders' while they are not prepared to pull out of all coal sector financing, end of story.

“The banks' attention to the human rights considerations that are always involved in coal sector financing are patchy at best, and amount to little more than lip service to the UN human rights obligations that so many of them are signed up to. For as long as these banks continue to be coal industry supporters, they have to substantially beef up their human rights due diligence to protect communities in the industry's firing line around the world.”

Bruce Nilles, Senior Campaign Director, Beyond Coal at the Sierra Club said: "While there is demonstrated progress on the part of financial institutions, it's too little and too slow moving if we're to see any real impact on the climate disruption or public health. Banks need to better own their role and more actively harness their influence to transition off dirty energy sources."

Key findings from the 2015 report card:

• In spite of the financial distress faced by the coal industry overall, banks have approached financing decisions in a piecemeal fashion, with global financing for coal mining and top coal-fired power companies holding steady at $144 billion, compared to $145 billion in 2013.

• Disappointingly, major banks have also continued to finance several worst-of-the-worst “extreme coal” producers with major human and environmental impacts. Continued exposure to these coal mining companies shows that several banks continue to fail to meet basic human rights and environmental responsibilities.

• Global bank financing for coal mining, 2014: $69.62 billion (up from $55.28 billion in 2013)

• Global bank financing for the 30 largest coal-fired power producers, 2014: $74.39 billion, (down from $89.62 billion in 2013)

For further inquiries and interview requests, please contact:
Yann Louvel, BankTrack: +33 688 907 868, yann[at]banktrack.org
Claire Sandberg, Rainforest Action Network: +01-646-641-6431 claire[at]ran.org
Ruby Shirazi, Sierra Club: +01 201 562 8560, ruby.shirazi[at]sierraclub.org

About BankTrack
BankTrack is the global tracking, campaigning and NGO support organisation targeting the operations and investments of international 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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Bank of America dumps coal mining in sweeping new policy

Bank once labeled “Bank of Coal” announces broad commitment scaling down financial involvement in coal mining globally

Rainforest Action Network press release

7 May 2015

- To read the full Bank of America policy: http://bit.ly/1EXv0Ge
- 2015 Coal Finance Report Card, with grades for Bank of America: http://bit.ly/1cdZYzb
- Timeline of RAN’s campaign to push BofA, with photos and video: http://bit.ly/1FPrYEK

Charlotte, North Carolina, United States — Bank of America unveiled a new global coal mining policy yesterday committing to reduce exposure to coal mining companies across the board. Bank of America’s Andrew Plepler announced the new policy at the bank’s annual shareholder meeting this morning in Charlotte, stating, "With regard to coal, over the past several years we have been gradually and consistently reducing our credit exposure to companies focused on coal mining. Our new policy...reflects our decision to continue to reduce our credit exposure over time to the coal mining sector globally.” The policy change comes after four years of campaigning from Rainforest Action Network and other groups, and is the strongest policy of its kind to date.

“Today’s announcement from Bank of America truly represents a sea change: it acknowledges the responsibility that the financial sector bears for supporting and profiting from the fossil fuel industry and the climate chaos it has caused,” said Rainforest Action Network Climate and Energy Program Director Amanda Starbuck. “In real terms, this means the bank is turning its back on the coal mining industry and committing to energy efficiency and renewable energy .”

In light of the new coal policy, Bank of America received a BBB grade on coal mining from Rainforest Action Network, BankTrack, and the Sierra Club in the 2015 Coal Finance Report Card — the highest grade given to a bank to date in the report card. The 2015 report card, which was released Monday, cited the impending Bank of America policy change as a bright spot that other banks should emulate. The new Bank of America commitment states, “Bank of America will continue to reduce our credit exposure to coal extraction companies. This commitment applies globally, to companies focused on coal extraction and to divisions of diversified a mining companies that are focused on coal.”

“This is a challenge to other financial institutions,” said Starbuck. “We don’t need banks to change the lightbulbs at their corporate headquarters, we need them to stop bankrolling fossil fuels that are killing the climate.”

However, Bank of America received lower grades in coal-fired power and human rights, and Starbuck cautioned that Bank of America will have to live up to its commitments on coal-mining. “RAN will rigorously monitor the implementation of this policy and hold Bank of America to its word. We also hope other banks will go further than Bank of America went today. There are just a few short years left to prevent catastrophic damage from runaway climate change. We need to cut off the financial support for the coal industry — and we need to keep all fossil fuels in the ground.”

RAN announced its campaign targeting Bank of America in 2011, in light of the fact that Bank of America was considered the most resistant to changing its position on coal of all the major American investment banks. RAN, along with hundreds of allied groups, previously introduced shareholder resolutions at Bank of America annual meetings; worked with directly-impacted communities in the Powder River Basin, Appalachia, India, and Colombia to document environmental and human rights abuses related to Bank of America-backed coal mining companies; disrupted Bank of America recruitment efforts on campuses; organized direct action protests at Bank of America branch locations; and hung a “Bank of Coal” banner off the side of Bank of America stadium in Charlotte, North Carolina, among many other tactics.

For further inquiries and interview requests, please contact:

Claire Sandberg, Rainforest Action Network: +1 646-641-6431 claire[at]ran.org

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Bank of America has just dumped coal

Cecilia Jamasmie

Mining.com

7 May 2015

Bank of America, one of the largest banks in the United States, has decided to slash its financing for coal mining projects, as it now considers the sector as a “highly risky” one to invest on.

Speaking at the shareholders meeting, Andrew Plepler, Bank of America's Corporate Social Responsibility executive, said the new policy reflects the lender’s decision to continue to reduce its credit exposure to the coal mining.

"Today, our renewable energy portfolio is more than three times as large as our coal extraction portfolio," Plepler said. "The transition from high-carbon energy to low-carbon energy will continue. At Bank of America, we will continue to do our part to accelerate this transition for our customers, clients and communities."

The new bank policy, published Wednesday, notes that the “dynamics around coal are shifting,” and cites pollution regulations, changes in economic conditions, increased competition from shale gas and renewable power as the main drivers of such change.

According to the World Coal Association, coal currently supplies about 30% of the world’s main energy needs and over 40% of its electricity. At the same time, consumption of the fossil fuel in China, the world’s biggest consumer, fell in 2014 for the first time in 14 years. The nation has said it will ban coal use in smog-cloaked Beijing by 2020.

Bank of America is not alone. Other major financial institutions, such as Goldman Sachs, are also distancing themselves from the fossil fuel.

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ING announces end to financing of major mountaintop removal coal miners

Amsterdam

11 May 2015

At its annual general meeting today, Dutch bank ING revealed that as part of its updated environmental and risk framework, it is to end financing for coal mining companies that produce more than one million tons of coal extracted using the highly controversial practice of mountaintop removal (MTR).

Yann Louvel, BankTrack's Climate and Energy Campaign Coordinator, commented: "Following similar recent moves from other European banks Barclays, BNP Paribas, RBS and Société Générale, this is another important step forward since it will exclude US coal mining companies such as Arch Coal and Alpha Natural Resources, the main MTR producers, and it covers ING underwriting, not only lending. ING must now go further and exclude all MTR producers from its portfolio."

Paul Corbit Brown, from the Appalachian organisation Keepers of the Mountains in the United States, participated earlier today at the ING AGM.

Paul Corbit Brown commented: "ING has been involved in the past few years in several transactions with MTR producers like Arch Coal, Metinvest and ArcelorMittal. By supporting these companies, it participated in the destruction of one of the most beautiful mountain ranges in the world. The coal industry uses more than 3,000 tons of explosives daily to blow up our mountains, burying thousands of miles of rivers and causing rains to spread poisons in our communities. MTR is not just an environmental crime but is a real danger to people, and we are seeing cancer cases multiply.

"That's why I asked the ING board today the precise content of their new policy on MTR and if it would exclude such transactions in the future. ING's new MTR direction will be further encouragement for affected communities that are fighting back against the industry."

ING had mentioned in its recently published annual report for 2014 that "New restrictions on financing the controversial mountaintop removal mining practice in the US Appalachia have been introduced", but the content of the new policy was not made public until today.

Ralph Hamers, ING's chief executive officer, answered Paul Corbit Brown stating that ING will no longer finance the main MTR producers - companies producing more than one million tons of coal via MTR every year.

Paul Corbit Brown continued: "While this is a good step, damage from MTR operations does not start at one million tons but with the first one. There are no more than 20 companies practicing MTR. ING should exclude all of these 20 companies altogether."

Yann Louvel concluded: "Following today's welcome news, we will closely track the implementation of this new policy at ING and along with our international partners continue to exert pressure on laggard banks that continue to bankroll this dodgy practice. It is now time for Credit Agricole, Natixis and Deutsche Bank, among others, to follow suit and end any financial link with MTR producers."

For further inquiries and interview requests, please contact:
Yann Louvel, Climate and Energy Campaign Coordinator, BankTrack: +33 688 907 868 yann[at]banktrack.org
Paul Corbit Brown, Keepers of the Mountains: +49 176 818 74863

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Members of three Danish pension funds vote to divest from fossil fuels

Academics, civil engineers and architects from three of six funds worth £23bn vote to sell off coal and high risk oil and gas – but lawyers, vets and other engineers vote against divestment

Damian Carrington

Guardian

5 May 2015

Academics, civil engineers and architects in Denmark have voted in favour of their pension funds selling off coal and high risk oil and gas investments, because of the role of fossil fuels in driving climate change.

However, votes on divestment by lawyers, vets and other engineers were narrowly lost.

Together the six pension funds for Danish professionals cover 200,000 people, about 5% of all workers, and have €32bn (£23bn) of assets. Denmark’s largest pension fund, PFA, has already excluded tar sands companies and PKA, the fourth largest fund which provides pensions for nurses, has excluded over 30 coal companies.

“We are very happy with the success we have had so far,” said Prof Thomas Meinert Larsen, at Copenhagen University and part of the Danish Fossil Free campaign. “It is very encouraging that we have had more support this year than last year. We think it is only moving in one direction.”

Other major financial institutions in Scandinavia have also divested from fossil fuel stocks.

The region’s biggest fund manager Nordea and Norway’s sovereign wealth fund, the world’s biggest, have sold out of dozens of coal companies. On Monday, Norway’s £580bn sovereign wealth fund said it had cut by 40% its investments in companies whose sole business is coal mining and also suggested to general mining companies, in which the fund has much bigger stakes, that they spin off their coal assets.

The six Danish pension funds held votes in April on divesting from coal, tar sands, Arctic and deepwater oil and gas exploitation.

The largest, called the MP Pension and representing 110,000 academics, voted in favour of a resolution presented at their annual general meeting, as did the smaller architects and civil engineer funds. But the boards that run the academics and architects funds said they would not implement the decision, arguing that engaging with companies was preferable.

“They say their engagement is really successful,” said Larsen. “So we say ‘can you show us some examples?’ But they can’t really come up with anything.” He noted that awareness of divestment had been raised such that the Danish business association for the pension and insurance industry have placed it on the agenda of their annual meeting taking place this week.

The boards of the lawyers and engineers funds, where votes for divestment were narrowly lost, nonetheless said they would look into the risk of the funds losing money by being invested in fossil fuels. The World Bank and Bank of England have both warned of a serious risk to coal, oil and gas investments if the world’s nations fulfil their pledge to cut carbon emissions rapidly.

The rising prominence of divestment in Scandinavia is part of a fast-growing and UN-backed climate change campaign that has already persuaded 180 institutions to sell off investments in coal, oil and gas. On Thursday, the Church of England sold off its investments in coal and tar sands, which produce far more carbon dioxide than oil and gas.

A series of analyses have shown that there are already several times more fossil fuels in proven reserves than can be burned if catastrophic global warming is to be avoided. Divestment campaigners argue that the hundreds of billions of dollars companies are still spending every year on exploration for even more fossil fuels is a danger to both the climate and investors’ capital.

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Church of England $14bn fund blacklists coal, oil sands

Frik Els

Mining.com

30 April 2015

The Church of England is one of the world’s richest religious institutions with an investment portfolio worth $13.8 billion.

On Thursday the body said that it will no longer make any investment in companies that produce coal or are involved in Canada’s oil sands extraction.

Announcing the changes to the investment criteria the Bishop of Salisbury, the church’s lead official on the environment, called climate change “the most pressing moral issue in our world”.

The Church did leave some space for mining investment however by limiting the ban to companies which are primary producers – constituting more than 10% of revenues – of the two commodities. Metalurgical coal also appears to be exempt under the new investments rules:

The bishop explained it this way reports the FT:

This means it may retain shares in companies such as BHP Billiton, which mines coal but earns a large chunk of revenues from iron ore, copper, and aluminium, said Edward Mason, the Church’s head of responsible investment. But companies that focus on coal mining, such as Peabody in the US, would be excluded.

“It’s about an alignment of interests,” Mr Mason said. “If you are a specialist coal mining company you don’t share the interest that we have in the transition to a low-carbon economy and the sense of it as a moral imperative. But if you are a BHP Billiton, where coal is a small part of your portfolio, we can have a constructive conversation with you about the future of coal for you as a company.”

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A “wave of bankruptcies” about to hit coal industry

By Nick Cunningham

Oilprice.com

20 March 2015

The future for the coal industry is looking “increasingly bleak,” according to an investor’s note from Macquarie Research. The analysis firm also said that “a wave of bankruptcies” appear to be just over the horizon as coal mining companies deal with mounting debt and a shrinking market.

The coal markets have collapsed in spectacular fashion over the last few years due to a perfect storm of factors. U.S. coal producers first had to compete ferociously with shale gas in America’s electric power sector as fracking took off about a decade ago. That forced an array of coal plants to shut down as cheap gas washed over the country. Subsequently a regulatory crack down from the federal government – including forthcoming restrictions on greenhouse gases – further dimmed the growth prospects of coal.

But U.S. coal producers always had the international market, and exports stepped up in concert with falling domestic consumption. Now the foreign buyers are shrinking as well. China, the one country that the coal industry could count on for ceaseless growth in coal consumption, actually burned 2.9 percent less coal in 2014 than it did the year before.

When China, which consumes about as much coal as the rest of the world combined, sees its level of coal burning stay flat or even fall, that raises red flags for the entire industry.

There are two other major factors contributing to the coal bust. First, a flood of new coal mines came online around the world in the last several years, creating a glut on the international market. Second, China has implemented protectionist measures to guard its domestic coal mining sector. As a result, it saw a 22 percent decline in coal imports at the end of 2014 from a year earlier. This has exacerbated the global glut. Still, even Chinese coal companies are struggling – an estimated 7 out of 10 are not profitable.

U.S. coal producers had predicted that the pain would be temporary and that coal markets would rebound. But that does not appear to be the case. In fact, U.S. domestic coal prices are at six-year lows, having declined to $45 per short ton this year, a nearly 20 percent drop off from 2014. Coal markets are also getting battered by the oil bust and broader decline in commodity prices, as well as the strong dollar, which makes exports less competitive. U.S. coal production is at its lowest level since 1993 and may decline even further.

Macquarie Research downgraded its projection for coal prices by $5 per ton, and said that the only way to bring the market back into balance was for capacity to be shut in.

Even worse, investors are starting to abandon the industry. Peabody Energy (NYSE: BTU), one of the larger coal producers, had to pay a 10 percent interest rate on its latest bond offering. Worse off companies may struggle even to access financing, forcing them to close up shop. Arch Coal (NYSE: ACI) and Alpha Natural Resources (NYSE: ANR), for example – once prominent and stable coal producers – have seen their share prices plummet into penny-stock territory. The clouds are darkening over U.S. coal.

In the face of such dim prospects, Robert Murray of Murray Energy is hoping to defy the odds. He agreed to pay $1.4 billion to take over rival Foresight Energy, an Illinois coal operator. The combined company will make Murray Energy the third largest coal producer in the United States. However, to finance the deal, Murray will have to take on new debt, a risky move in such a depressed climate.

As Macquarie Research noted, the industry is shrinking. High cost producers are going to be forced out of the market. Murray plans to consolidate and survive by cutting costs – which he has done by skirting labor and environmental standardsfor quite a long time. But unless coal prices rebound, and there is not a good reason to think they will, Murray Energy may too be in for a grim future.