'Coal' climate conference closes with a plan ...

Published by MAC on 2018-12-17
Source: Statements, Bloomberg, Guardian, New York Times

... but is there any realistic commitment

Katowice COP24 Outcome Incompatible with Paris Agreement

Ambition, Equity, and Human Rights Left Behind in Poland Climate Talks

CIEL https://www.ciel.org/news/katowice-cop24-outcome-incompatible-with-paris-agreement/

15 December 2018

Katowice, Poland—As parties to the UN Framework Convention on Climate Change wrapped up two weeks of negotiations in Katowice, Poland, the halls of the Spodek Center echoed with the rising voices of young people, indigenous groups, vulnerable communities, and people of all nations who demanded that negotiators deliver on the promises made three years ago in the Paris Agreement.

In October, a long-awaited IPCC report exposed the urgency and necessity to limit global temperature increase below 1.5 degrees Celsius and warned of the dire consequences for human rights, human lives, and the global environment if we fail to do so. In Katowice, Parties arrived with a clear mandate: translate the IPCC’s findings into a commitment to raise ambition; deliver a climate action package commensurate with the level of ambition and committed resources required to reach this goal; and adopt a rulebook to guide how it happens.

“We are deeply disappointed with the outcome of these negotiations,” said Erika Lennon, CIEL Senior Attorney. “Simply put, the outcome of COP24 is not compatible with the Paris Agreement, which promised to protect, respect, and consider human rights in climate action. In the final hours of negotiations, the only reference to human rights disappeared from the text when Parties punted a decision on carbon markets for another year.1 The rulebook gavelled in at the Spodek Center in Katowice offers too little people-centered, rights-based guidance for countries to jointly deliver on the Paris promises, conditions that the IPCC recognizes as necessary to keep global temperature increase below 1.5 degrees Celsius. As delegates return home and countries work toward increasing ambition and enhancing national climate commitments, they must also remember that they are already bound by international agreements to respect human rights, and that these must drive how they implement necessary climate action and ensure equity.”

“The IPCC report made clear that respect for human rights and robust public participation are a prerequisite for effective climate action,” said Sébastien Duyck, CIEL Senior Attorney. “Not only have countries largely failed to adopt these recommendations in Katowice, but the COP itself casts a long shadow on the role and value of stakeholder engagement in UN climate processes. Poland’s overt exclusion of and attacks against civil society participants at the COP sends a chilling message about the direction of human rights protections at the UNFCCC. We look to Chile, a country that championed the adoption of the Escazú Agreement, the regional agreement on environmental democracy, to facilitate this process in a truly participatory manner going forward.”

“The failures here won’t stop the climate crisis, but nor will they stop people worldwide from taking urgent action to confront climate change,” said Carroll Muffett, President of CIEL. “Where negotiators are failing, people are rising—in the streets, in the courtrooms, in boardrooms. People are fighting against rising climate chaos with every tool they can find. And the governments and corporations must now decide if they will take bold action on climate or accept responsibility for failing to do so.”

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Article 6 of the Paris Agreement created both market (articles 6.2 and 6.4) and non-market mechanisms (article 6.8) through which Parties could cooperate to achieve their mitigation goals. Market mechanisms include trading of internationally transferred mitigation outcomes or carbon credits and through project-based emissions credits via the so-called “sustainable development mechanism.” Non-market mechanisms allow for collaboration and coordination between parties to enhance mitigation and adaptation ambition.

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Climate ideals clash with coal realities at Polish-led U.N. talks

Barbara Lewis

Reuters - https://af.reuters.com/article/africaTech/idAFL8N1Y95BB

14 December 2018

• Coal bosses say coal needed for now
• Big business seek to address investment risk
• Coking coal for steel seen as a strategic mineral

KATOWICE, Poland - Delegates at U.N. climate talks in the Polish city of Katowice point to the mining museum next to the conference venue as the proper place for coal, which provides 80 percent of the country’s electricity.

Poland’s decision to host the negotiations to revive the 2015 Paris agreement on phasing out fossil fuel has laid bare the tension between high-minded goals and business realities.

A short drive from the conference venue, at the Silesian region’s dozen or so remaining mines, tonnes of freshly dug coal thunder down shoots to be rail-roaded to power plants for carbon-intensive generation.

Coal bosses see a need to address climate risk, but say Poland must use thermal coal for electricity until it has a better option.

Silesia also produces coking coal, used in steel, and viewed as a strategic mineral even by the European Union, which seeks to be an environmental leader.

Poland’s JSW, the European Union’s largest coking coal producer, is seeking to grow.

“The world has to tackle the increase of carbon dioxide emissions, but I do not see a chance the world can live without steel these days and there is not an easy solution to substitute steel and substitute coking coal,” CEO Daniel Ozon told Reuters.

Financial backing can be an issue for all forms of coal and JSW has its eye on Chinese banks as international lenders are wary.

Generation Gap

For many Poles, coal mining symbolises national independence.

State-dominated companies can look to a government striving to win over an electorate divided between an older generation that associates coal with a reliable income and a sense of community, and youths engaged in climate protests.

As the demonstrators march, international business works to keep shareholders on side.

One of the climate team from the world’s biggest producer of coking coal BHP was among business representatives taking part in the side events accompanying the negotiations.

The U.N. talks have proved long and fractious, with flash-points including a revolt by Saudi Arabia, Russia, the United States and Kuwait against a major scientific report that laid out the reasons to limit global warming to 1.5 degrees Celsius.

“The real challenge is not whether it’s 2 degrees or 1.5 degrees; it’s that not enough is happening,” Graham Winkelman, BHP’s practice lead on climate change, said in an interview.

BHP stands apart from other big miners with a goal to make its own operations carbon neutral, in line with the Paris agreement, by the second half of the century.

But just as governments have to work out practicalities, it is also unclear how BHP can achieve its goals.

“There is no definitive path-way,” Winkelman said, although he repeated a frequent industry request for a carbon price to help shift investment towards a greener technology.

Poland’s aim is to share the challenges of bringing about a “just transition”, Polish Deputy Environment Minister Michal Kurtyka, who presided over the talks, said.

As a graduate of Paris’ elite Ecole Polytechnique, a physicist, an economist and an engineer, his favoured solution is electric vehicles. With fewer moving parts and less wasted heat than internal combustion engines, he says they will help even if they run on coal-fired power.

As a citizen of a country that switched in 1989 from “a centrally planned to a market economy,” Kurtyka has first-hand experience of deep change.

“In my young days, growing up in Krakow, that was a completely different city from now. At 8 p.m. the lights switched off. You could not open the window because of air pollution,” he said.

In Katowice, some residents say they still can’t let the air in and are not confident that is about to change.

Additional reporting by Anna Koper and Agnieszka Barteczko Editing by Susan Fenton

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World Bank, Canada, UK to Assist Countries in Transition from Coal; Accelerate Uptake of Cleaner Energy

Joint press release

13 December 2018

KATOWICE — The World Bank, Canada, and the United Kingdom today announced financial, technical and advisory support for developing countries that have decided to transition away from coal and accelerate the uptake of cleaner sources of energy.

The Canadian government pledged up to CAD $275 million to fund the Energy Transition and Coal Phase-Out Program. This funding will help developing countries in Asia to slow coal production, while scaling up energy efficiency and low-carbon energy alternatives.

At the same time, the UK government pledged £20 million to the World Bank’s Energy Sector Management Assistance Program (ESMAP), a global knowledge and technical assistance program administered by the World Bank to help low- and middle-income countries implement environmentally sustainable energy solutions.

Both these programs will support the deployment of solar and battery storage, geothermal and offshore wind development, coal plant closure, and improvement in energy efficiency, particularly in buildings and cooling.

With the new financial support from Canada and the UK, the World Bank will also expand its work to help countries that have made the decision to transition away from coal close mines and address the resulting socioeconomic impacts on workers and communities. This means taking steps to protect jobs and skills and preserve the environment, including through strong social safety nets for coal mine workers and the reclamation and repurposing of coal mine areas.

In conjunction with COP24 in Poland, the World Bank is launching a new report “Managing Coal Mine Closure: Achieving a Just Transition for All,”which outlines the lessons learned from coal mine closures to date, and key steps governments can take to minimize social conflict and economic distress.
The report shows that the socioeconomic impacts of coal mine closures are significant, with some coal-dependent regions continuing to lag socially and economically. However, countries can achieve a “Just Transition for All*” through early engagement and dialogue and strong social assistance programs for workers, families and communities.

Governments play a leading role in this transition, bearing the cost of physical closure of mines and labor transition programs, even when coal mines are privately owned. While many coal-mining areas are unable to create new job opportunities, governments can implement labor mobility schemes, enabling coal mining communities to move to areas with strong economies and new job prospects. Because the coal mine industry has shifted from West to East, future coal mine closures and associated job losses will be concentrated in Asia, with the top three global coal producers, China, India and Indonesia, the most affected.

“Our focus is on the human dimension and helping countries accelerate the energy transition. A Just Transition for All means people’s livelihoods and communities need to be protected and that requires a carefully managed, sustained, long-term approach. Governments must prepare well in advance of any coal mine closures, implementing strong safety nets for workers ahead of job losses,” said Riccardo Puliti, Senior Director and head of the Energy and Extractives Global Practice at the World Bank.

“Countries need to phase out coal if we are to meet our Paris Agreement targets. Pollution from coal has major repercussions on climate change, on our health, and on people. People need to be at the heart of our policies to tackle climate change. We know we have to phase out coal in a way that supports coal workers and coal communities, because the transition is not always easy. By working together, we can cut emissions and make sure people have good job opportunities in the future clean economy,” said Catherine McKenna, Canada’s Minister of Environment and Climate Change.

Claire Perry, the UK’s Minister for Energy and Clean Growth, said, “The UK and Canada have truly led the world in powering past coal, with the UK going more than 1,700 hours without coal this year. But climate change is a global problem, which requires a united response. This World Bank fund, backed by £20 million from UK Government, will allow world-leading expertise to be shared globally to encourage developing countries to move away from coal power and embrace renewable energy, helping them to save the planet while giving their economies a vital boost.”
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*The “Just Transition for All” concept was introduced by the International Trade Union Confederation. It focuses on jobs, livelihoods, and ensuring that no one is left behind as we race to reduce emissions, protect the climate, and advance social and economic justice. The “Just Transition” requires a strong focus on creating timely and sufficient alternative employment opportunities to replace the jobs lost.

Contacts:
In Washington:
Zubin Bamji, (202) 458-0431, zbamji@worldbank.org
Clare Murphy-McGreevey, (202) 458-1501, cmurphymcgreevey@worldbank.org
For Broadcast Requests:
Huma Imtiaz, (202) 473-2409, himtiaz@worldbankgroup.org
Website: http://www.worldbank.org/en/topic/extractiveindustries

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Global bankers spurn Trump's pleas to keep making loans for coal

Bloomberg News

http://www.mining.com/web/global-bankers-spurn-trumps-pleas-keep-making-loans-coal/

13 December 2018

U.S. President Donald Trump is trying to recruit international lenders to his pro-coal crusade.

They aren’t enlisting.

The European Bank for Reconstruction and Development, established to help foster democracy-building projects in former communist countries, is poised to adopt a strategic plan that rules out financing coal plants and mines — despite opposition from the U.S., the bank’s single biggest shareholder.

That follows a joint pledge issued Dec. 3 by nine multilateral development banks that give financial aid to poor countries — including the European one — to scale up their support of climate-friendly projects and scale back their assistance for anything that emits significant amounts of carbon dioxide.

The moves underscore the limits of both Trump’s campaign to revive coal and his influence on the world stage, where his proselytizing for the fossil fuel is winning few converts. And they illustrate the difficulty in trying to undo policies forged through years of international negotiations by the Obama administration, which sought broad buy-in from other countries for its environmental agenda.

“The Trump administration can scream into the void, but they’re not going to have very much success,” said Alex Doukas, a program director at the advocacy group Oil Change International. “Given the economics and how the conversation around coal has shifted, you might as well try to push these banks into rotary phones or horse-drawn carriages.”

It’s not for lack of trying.

Trump scrapped an Obama-era policy that directed U.S. representatives on multilateral development banks to prioritize clean energy investments and rarely support coal power plants. He has dispatched cabinet secretaries on missions to Europe to tout coal and natural gas. He’s even encouraged the United Nation’s Green Climate Fund to support high-efficiency coal plants and natural gas infrastructure.

And on Monday, at an international gathering in Poland of countries that agreed to cut greenhouse gas emissions as part of the 2015 Paris agreement, the Trump administration held its own event to promote coal. Amid protesters shouting “shame on you,” U.S. officials warned against allowing “alarmism” over climate change to overcome “realism” about worldwide energy demands.

“We strongly believe that no country should have to sacrifice economic prosperity or energy security in pursuit of environmental sustainability,” Wells Griffith, a White House energy adviser, said at the session.

Trump’s zealous advocacy of coal, which provides about 40 percent of the world’s electricity as well as a large share of its heat-trapping carbon dioxide, is continuing unabated despite increasingly dire warnings about climate change. A United Nations panel in October said the world faces catastrophic consequences if it doesn’t take “unprecedented” action to slash greenhouse gas emissions. Trump’s own government issued a report last month estimating that unchecked climate change could cost the country hundreds of billions of dollars.

But many places need coal, Trump said last year, “and we want to sell it to them.” The president vowed to obliterate “barriers to the financing of highly efficient overseas coal energy plants.”

Last year the U.S. Treasury Department adopted a policy directing U.S. representatives on development banks to support helping “countries access and use fossil fuels more cleanly and efficiently.”

But that did nothing to shift the stances of the U.K. and other big shareholders in the institutions. The World Bank Group, for example, has maintained a strategy adopted in 2013 to encourage investment in “sustainable and modern energy” projects.

“It’s really hard for one board member to undo all that,” said Steve Herz, a senior international policy adviser with the Sierra Club. “So the prospects of the bank doing a coal project again are very, very slim.”

And it’s only getting slimmer. In October, a unit of the World Bank known as the International Finance Corp., where the U.S. has a 22 percent voting share, raised a new hurdle to coal projects, clarifying that the money it invests in banks, commercial enterprises and other projects can’t later be used to fund coal operations. The move effectively put coal mining and coal-fired power plants in the same verboten category as investments in weapons and casinos.

Similar headwinds have appeared for the Trump policy at the five major multilateral development banks in which the U.S. is a member. Chief among them: the European Bank for Reconstruction and Development. The EBRD’s draft strategy for limiting coal investments has been opposed by Trump’s representative.

“Management’s proposal to completely curtail support for coal power generation would limit the bank’s ability to respond to the energy security and affordability needs of countries of operations,” Acting Assistant Secretary of the Treasury Geoffrey Okamoto told the bank in May.

The EBRD is unlikely to heed the Trump administration’s warning, said Han Chen, an international energy policy manager at the Natural Resources Defense Council. “The U.S. is still swimming against the current,” she said.

U.S. coal exports have climbed the past two years, driven both by high global prices and extra rail and port capacity to transport it, which was freed up by a decline in domestic demand. So far this year, U.S. exports are up 30 percent from the same period last year, according to the U.S. Energy Information Administration.

That’s still well below the 126 million tons the U.S. exported in 2012, the most recent peak, but even the modest uptick has helped fill a void created by continued declines in U.S. demand. U.S. coal consumption is on track this year to sink to its lowest level in 39 years, according to EIA projections.

Some coal advocates think the Trump administration needs to get more aggressive, particularly at the World Bank, an institution the U.S. helped forge more than seven decades ago to help Europe recover from World War II. The U.S. is the biggest World Bank shareholder, with about 16 percent of its voting share.

Barry Worthington, executive director of the U.S. Energy Association, has urged the White House to leverage its voting power to block World Bank financing for an array of projects — from roads and bridges to wind farms and solar arrays — “until the World Bank changes its anti-fossil mentality.”
Veto threat

“If you want to get their attention, start vetoing wind and solar projects,’’ said Worthington, whose association represents the U.S. on the World Energy Council and includes oil and coal mining companies as members. “We ought to take a stance at all of these international financial institutions that we veto everything — everything — until they change their anti-fossil bias.’’

Coal still provides about 40 percent of the world’s power. And at least 30 gigawatts of new coal-fired electric generation capacity is being constructed, largely in the developing world as nations such as India, Indonesia, Vietnam and the Philippines build out capacity, according to the International Energy Agency.

The Trump administration could act alone to prop up overseas coal projects — and potentially ride to the rescue of one long-planned power plant in Kosovo — with a lending organization operated solely by the U.S. The so-called Kosova e Re plant aims to tap into the vast local stores of a low-grade coal known as lignite and boost electric reliability in the tiny Balkan country, potentially replacing a heavily polluting 48-year-old coal plant.
Kosova plant

In October, World Bank President Jim Yong Kim said his institution would not back the project, after concluding that renewable power is now a cheaper option. Now, the Overseas Private Investment Corp., a U.S. government agency, is considering stepping in.

It would be a major departure for OPIC, which hasn’t supported a coal-fired power plant since 2008. Representatives of the U.S. agency did not respond to requests for comment.

Environmental groups seeking to discourage OPIC support for the project have been told by agency officials to submit comments.

The Trump administration’s coal advocacy can yield political points for the president even if it doesn’t translate into new plants. Trump’s campaign promise to revive coal helped him win West Virginia and Pennsylvania in the 2016 election, and now that he’s in the White House, any efforts to aid the industry deliver a psychological boost to the sector.

“This administration spends a lot of time and energy talking about how it’s going to help the coal industry,” said John Coequyt, global climate policy director for the Sierra Club. “Those public initiatives that amount to nothing are still good politically for the administration.”

(By Jennifer A. Dlouhy and Jeremy Hodges)

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Santander move on coal finance welcome but ‘far from enough’ to address its climate impacts, say groups

Joint press release

13 December 2018

Madrid, Spain - Following a recent update to its coal finance policies, Spain’s biggest bank Banco Santander has committed to ending its direct financing of coal projects (mining and power) worldwide, a decision welcomed as a good move by NGOs. [1] Santander’s new commitment comes just a few weeks after the release of a video pushing banks including Santander to end their coal financing. [2]

The policy changes make Santander the twenty-first major international bank to commit to end project finance for new thermal coal mines, and the nineteenth to do the same for new coal plants worldwide. [3]

However the new commitment does not compel Santander to stop financing coal power companies, and will not see the bank cut its ties with companies such as PGE, Poland’s biggest utility and one of Europe’s top polluters. In September this year, Santander was one of a group of banks which provided PGE with a 950 million euro syndicated loan to support the company’s coal plant development plans. [4]

Reacting to Santander’s new coal finance commitment, Yann Louvel, Climate campaigner at BankTrack, said:

“This is a welcome and long overdue decision from Banco Santander. It will see it no longer directly financing corrupt, highly embarrassing dodgy coal deals such as the Punta Catalina project in Dominican Republic, which Santander financed in December 2015 right after COP21 in Paris. [5]

“Santander’s lack of ambition, though, at a time when banks need to really step up and reduce their exposure to fossil fuels in big, new ways to tackle climate change as demanded by the ‘Fossil Banks, No Thanks!’ campaign, is disappointing. By failing to exclude any of its coal clients from future support, Santander is still nowhere near moving beyond coal.” [6]

Santander’s progress on ending its direct financing of coal projects is insufficient as more than 90% of coal financial flows take place via indirect financing to coal companies. [7]

The bank’s new guidelines contain no immediate exclusion criteria for its existing coal customers which would tackle its financial assault on the climate. To date, several European banks have adopted such criteria, blacklisting significant coal producers and coal utilities. [8]

Carlota Ruiz-Bautista, environmental lawyer at Instituto Internacional de Derecho y Medioambiente (IIDMA), said:

“We welcome Banco Santander's tightening of its climate policies, a positive step towards limiting global warming to 1.5 degrees. However, it needs to deal as soon as possible with the loopholes in these policies to ensure it moves its capital fully away from carbon intensive economic sectors. This means adopting commitments to cease financing the coal sector as a whole, including all companies such as PGE listed in the Global Coal Exit List.”

As BankTrack and partners revealed last week in a new research report, over the past three years Santander has provided more than US$1.6 billion in financing for six major companies actively developing new coal plants around the world. The bank has done this via general corporate financing, which will not be affected by the new policies. [9]

Notes for editors:

[1] See Banco Santander’s updated coal policies.

[2] See the video on line, which also targets BNP Paribas, UBS, Credit Suisse and Intesa SanPaolo.

[3] See the list of banks that ended direct finance for new coal mines/plants worldwide.

[4] See the press release condemning this dodgy deal.

[5] See the Punta Catalina dodgy deal profile.

[6] See the ‘Fossil Banks, No Thanks!’ campaign website.

[7] See BankTrack’s most recent analysis (December 2018) which identified that, over the last three years, total lending from banks to coal plant developer companies was comprised of 8% project finance and 92% general corporate finance.

[8] See the list of banks that have restricted indirect coal financing.

[9] See the financial data on urgewald’s Global Coal Exit List. The six coal plant developers financed by Santander since 2016 are: RWE, PGE, Tauron, SPIC, Eneva and SGCC.

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COP24: New research reveals the banks and investors financing the expansion of the global coal plant fleet

Joint press release

• Japanese banks top lenders, Chinese banks top underwriters
• US companies biggest institutional investors in the coal plant pipeline

5 December 2018

Katowice, Poland - While the latest IPCC and UN Emissions Gap reports both issue stark warnings on the need for an accelerated phase-out of coal power, the global coal plant fleet is still expanding. At today’s press conference during the UN Climate Summit in Katowice, Urgewald, BankTrack and 26 NGO partners released new research identifying the banks and investors backing a frightening pipeline of new coal projects.

“In the 3 years since the Paris Climate Agreement was signed, coal-fired capacity has grown by over 92,000 MW, and coal plants totaling over 670,000 MW are still in the pipeline,” warns Heffa Schuecking, director of the German NGO Urgewald.

According to the NGOs’ data, the finance industry invested over US$ 478 billion in the world’s top 120 coal plant developers between January 2016 and September 2018.

“Unless banks and investors rapidly cut off their financial flows to coal plant developers, it will be impossible to come to grips with the climate crisis. We are already close to overshooting the 1.5°C limit and time is running out,” says Greig Aitken, Climate campaigner at BankTrack.

Urgewald and BankTrack’s research examined lending, underwriting and institutional investments in the top 120 coal plant developers, which are responsible for over 68% of new coal-fired capacity in the pipeline. [1] All research results, including specific company, bank or investor results, are available at: www.coalexit.org/finance-data

Key results:

Lenders to the global coal plant pipeline

Since January 2016, 235 commercial banks provided over US$ 101 billion in direct loans to the 120 top coal plant developers. The largest lenders to coal plant developers are the Japanese banks Mizuho Financial and Mitsubishi UFJ Financial with US$ 12.8 billion and US$ 9.9 billion respectively.

A regional breakdown of the data covering the period 2016 to September 2018 shows that 30% of lending to top coal plant developers was provided by Japanese banks. The prominent role of Japanese banks is easily explained, according to Kimiko Hirata from the Japanese NGO Kiko Network: “Japan has the largest coal plant pipeline of any developed country and many Japanese companies are also champions of coal plant development overseas. Japanese banks are thus key drivers of coal expansion worldwide.”

Heffa Schuecking says: “What is surprising is that European banks, many of which have adopted policies restricting coal, still account for 25% of global lending to top coal plant developers.”

Among the top 10 lenders to coal plant developers are Citigroup from the United States (US$ 3.4 bn) and the European banks HSBC (US$ 2.3 bn), Standard Chartered (US$ 2.2 bn) and ING (US$ 1.9 bn). The rankings of each bank are provided in the annex.

Greig Aitken comments: “Although HSBC adopted a new coal policy in April this year, it has explicitly left the door open to the financing of new coal power plants in Vietnam, Indonesia and Bangladesh. The planned coal capacity additions in these three countries alone add up to over 103,000 MW, almost one sixth of the global coal plant pipeline. HSBC has to close this glaring loophole quickly if it’s to have any hope of contributing to global efforts to limit the effects of climate change.”

The new research reveals that the bulk of the lending to coal plant developers is in the form of corporate loans, and this type of lending is often not addressed by bank policies.

Standard Chartered, for example, adopted a new coal policy in September 2018, which says: “We will not directly finance any new coal power plant projects”. Although the UK-based bank did not sign off any direct project financing deals for coal plants in either 2017 or 2018, its corporate lending to top coal plant developers in China, Indonesia, Japan and the Philippines jumped from US$ 373 million in 2017 to US$ 1.18 billion in the first three quarters of 2018.

Even the Dutch bank ING, whose 2017 policy commits the bank to phase out all financing of coal power companies by 2025, has provided almost US$ 500 million to coal plant developers through loans and underwriting in 2018.

“These examples show that banks’ coal policies are still full of loopholes. If large banks do not shut the door on corporate loans and underwriting for coal plant developers soon, it will be impossible to achieve the Paris Climate Goals,” says Schuecking.

Top underwriters of the global coal plant pipeline

Although Chinese banks only account for 12% of direct lending to coal plant developers, they are giants when it comes to underwriting the share and bond issues of these companies.

Since January 2016, 238 international banks have channeled over US$ 377 billion to coal plant developers through underwriting. [2] The world’s top underwriter of coal plant developers is the Industrial and Commercial Bank of China with US$ 24.5 billion, followed by the China International Trust and Investment Corporation (CITIC) with US$ 19 billion and the Bank of China with US$ 18.2 billion.

Overall, Chinese banks account for almost 73% of underwriting for coal plant developers. This figure reflects China’s dominant role in coal plant development. In addition to more than 259,000 MW of new capacity in China’s own coal plant pipeline, Chinese companies are also developing almost 60,000 MW of new coal power capacity abroad. And China’s state-controlled banks play a central role in raising capital for this glut of new coal power, both at home and abroad.

Several US, European and Japanese banks that are prominent lenders to coal plant developers are also important underwriters. Among these are Citigroup (US$ 6 billion), HSBC (US$ 5.2 billion) and Mizuho Financial (US$ 5.2 billion). Overall, European banks account for 7.5%, Japanese banks for 5.2% and US banks for 4.7% of financial flows to coal plant developers through underwriting.

Top institutional investors in the global coal plant pipeline

While banks play a central role in helping coal plant developers acquire capital through underwriting their share and bond issuances, the ultimate buyers of these securities are investors. For 2018, the NGOs’ research identified 1206 institutional investors with combined holdings of US$ 139 billion in the top 120 coal plant developers. [3]

The world’s largest investor in coal plant developers is the US-based investment giant BlackRock, which holds shares and bonds in value of US$ 11 billion in 56 coal plant developers. The world’s second-largest investor in coal plant developers is Japan’s Government Pension Investment Fund, which holds investments of US$ 7.3 billion in 41 coal plant developers. Next in line are Malaysia’s Khazanah Nasional (US$ 6.7 billion), the US investment manager Vanguard (US$ 6.2 billion) and South Korea’s National Pension Service (US$ 4.5 billion).

“Many of the global investors and banks named in our research profess to be responsible climate actors. But while governments are debating the future of our planet’s climate in Katowice, the money flows from these investors are literally burning up our planet,” says Heffa Schuecking.

US based investors hold the largest stakes in coal plant developers. In total, US investors account for 35% of the institutional investments in coal plant developers. European investors account for 16% and Japanese investors account for 14%, while Chinese and Indian investors only account for respectively 6% and 7% of institutional investments in the bonds and shares of coal plant developers.

Looking forward

The news is not all bad, however. Some institutional investors have begun to act.

In 2017 and 2018, three of the world’s largest insurance companies – AXA, Generali and Allianz – adopted policies banning top coal plant developers from their portfolios. And just a few days ago, Norway’s largest private asset manager, Storebrand, announced a complete exit from all coal investments by 2026.

“The finance industry as a whole must replicate these policies,” says Greig Aitken. “It is shameful that large banks and investors are still partners in crime to companies whose business plans are a blueprint for triggering catastrophic climate change.”

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Notes for editors:

1. For a full list of coal plant developer companies, see: www.coalexit.org/database

2. Underwriting or investment banking refers to the process by which banks raise investment capital for companies by helping them market new shares or bonds. Banks usually purchase the newly issued bonds or shares and then re-sell them to other investors at a profit.

3. Among the institutional investors covered in this research are pension funds, insurance companies, mutual funds, asset management companies, commercial banks and sovereign wealth funds. It is likely that the investments of these institutions in coal plant developers are, in fact, significantly higher than indicated. Financial databases’ coverage of bond holdings is often incomplete and many pension funds do not report their holdings.

View all the new research results at: www.coalexit.org/finance-data

See also the Urgewald report “The 2018 Coal Plant Pipeline – A Global Tour”, which provides an overview of coal plant development in 54 countries. https://coalexit.org/sites/default/files/download_public/Urgewald_Report_Coal_WEB.pdf.pdf

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Brazil reneges on hosting UN climate talks under Bolsonaro presidency

Jonathan Watts

https://www.theguardian.com/world/2018/nov/28/brazil-reneges-on-hosting-un-climate-talks-under-bolsonaro-presidency

Reversal comes two months after country agreed to host COP25 conference in 2019 – and one month after far-right climate sceptic won election

27 November 2018

Brazil has abandoned plans to host crucial UN climate talks in 2019 amid growing signs of the anti-internationalism of the new government being formed by president-elect Jair Bolsonaro.

The foreign ministry announced the reversal in a message to Patrícia Espinosa, executive secretary of the UN Convention on Climate Change, according to the O Globo news website.

Two months after winning the bid to host the COP25 conference in 2019, the note said Brazil would withdraw its offer to stage the event due to the transition in government and budget restrictions, the paper said.

The decision is a blow to global efforts to prevent dangerous levels of global warming. Brazil, which is home to the the world’s biggest rainforest, the Amazon, has been an important player in international climate talks. Its sudden weakening of support comes just days before the opening of this year’s climate talks in Katowice, Poland.

The Climate Observatory NGO said Brazil had abdicated its role in one of the areas where it was most needed by the world and its own people.

“By ignoring the climate agenda, the federal government also fails to protect the population, hit by a growing number of extreme weather events. These, unfortunately, do not cease to occur just because some doubt their causes,” the group said in a statement.

The broken promise is in line with the anti-globalist rhetoric of the far-right former army captain, who was elected president in October and will take power in January. He threatened to quit the Paris climate agreement, then subsequently backtracked, but has made no secret of his desire to open up the Amazon to mining, farming and dam building.“It is not the first and certainly will not be the last bad news of Jair Bolsonaro for that area.”

He has also aligned himself closely to Donald Trump. Earlier this month he choose a new foreign minister who claims “climate alarmism” is part of a cultural Marxist plot and who said the United Nations has no language for “love, faith and patriotism”.

The shift has been abrupt. Just two months ago – shortly before the election – the foreign ministry said Brazil’s offer to host the COP25 talks “confirms the country’s leadership role in sustainable development issues” and “reflects the consensus of Brazilian society on the importance and the urgency of actions that contribute to the fight against climate change”, according to the O Globo news website.

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Coal is king at UN climate talks in Poland

https://corporateeurope.org/climate-and-energy/2018/11/coal-king-un-climate-talks-poland

30 November 2018

Next week, countries will gather in Katowice, Poland, for the latest round of UN climate negotiations, known as COP24. Their plan is to try to agree on how to implement the 2015 Paris Agreement. However, the Polish Government has invited coal and gas companies to sponsor the talks, giving these dirty energy corporations a platform to greenwash and lobby for false solutions.

It will be the third time that Poland, a country heavily reliant on coal, will host the UN climate talks. This year it's the 24th Conference of the Parties under the UN Framework Convention on Climate Change – COP24 – that will be taking place in Katowice. The last time the Polish Government presided over the talks, the conference was also brimming with sponsors from the coal and gas industries. If this COP is a repeat of the one Poland hosted in 2013 (COP19), this bodes ill for the climate.

COP19, the Corporate COP

So extreme was the corporate capture of COP19, over 800 members of civil society walked out of the talks on the penultimate day, chanting “Polluters Talk, We Walk”. Some of the biggest climate culprits had their logos plastered across the conference venue, advertising their climate credentials with little reflection of the reality of their business models. Culprits included steel giant ArcelorMittal, which made billions of profits on the EU carbon market while causing havoc in communities around the world; BMW, which had been lobbying hard against CO2 emissions reductions for cars; Polish oil company Lotos, which had been pushing for fracking, and other big polluters such as Emirates, Opel, and PGE - the largest, state-owned Polish power company and biggest developer of coal power plants in the EU.

But the event that caused most outrage was the International Coal and Climate Summit, celebrated as an official event in the middle of the talks, which had been organised by trade association and lobby group the World Coal Association along with the Polish Ministry of Economy, and was addressed by UNFCCC executive secretary Christiana Figueres. Despite coal's status as the dirtiest fossil fuel, leaving it no place in any scenario for a safe climate, Poland's government co-signed the industry's plea to the UN to embrace coal as a solution.

COP19 also saw negotiations with business in a pre-COP, co-hosted by the Polish employers group Lewiatan (the national branch of Brussels-based corporate lobby association and notorious climate laggards BusinessEurope) and held some weeks before the official climate talks. The meeting brought together ministers from key countries and representatives of big polluting corporations such as chemicals giant BASF, concrete and cement producer Cemex, and Polish power company PGE. NGOs were banned from attending the event. The debacle was summed up perfectly by the COP19 President, Polish Minister for the Environment Martin Korolek: “For the first time in 19 years, since the climate talks have been held, representatives of global business will be part of it.”

COP24, more of the same?

Just as in 2013, fossil fuels look set to take centre stage at COP24. This year’s talks take place in Katowice, a staunch coal-mining region. A government-backed trade union conference this summer made clear its position that the coal industry should be supported and coal treated like all other "energy carriers", adding that countries should be free to burn their own domestic energy sources (ie coal).

In its public relations efforts, the Polish Government is pushing the story of a successful transition away from coal, in particularly the town of Katowice itself. But Poland still gets 81 per cent of its electricity from coal. The first official sponsor to that was announced for this year's edition of the UN climate negotiations also happens to be a coal company. And while Poland appears to be taking a less confrontational approach – with no International Coal and Climate Summit scheduled so far – the push for coal is still very evident. Anticipating another coal-coopted COP, Greenpeace have just climbed the cooling tower of the Bełchatów coal plant to demand a move away from coal and a just energy transition.

As with COP19, the media attention may be focused on coal, but there is a general pro-business focus at COP24. This year, the Polish presidency organised a pre-COP in Krakow on 22-23 October with one day earmarked just for business. However, unlike COP19 (and possibly in part because of the 2013 walk-out), a few NGO representatives were apparently allowed to join this day.

Few snippets of that 'business day' have been reported on the UNFCCC and COP24 websites, and have neither lessened concerns that the meeting was just another case of privileged access to decision-makers for business, nor that the UNFCCC may endorse weak action by big polluters. The Deputy Executive Secretary of UN Climate Change, Ovais Sarmad, told the corporations at the meeting: “You have all highlighted that economic growth and tackling climate change are compatible. In fact, one leads to the other. Therefore, it is a very encouraging moment. We need to have a just transition to low-carbon.” COP24 President Michal Kurtyka warned against making “requirements unreasonable or too far-reaching” for business – despite the existence of strong scientific evidence that a far-reaching transformation of our energy systems and economies is inevitable to prevent catastrophic global warming. Sarmad and Kurtyka's words are a slap in the face.

The October 2018 IPCC report makes clear that an increase in global temperatures of 1.5C will have even more dramatic consequences than previously feared, and we may see these as early as 2030. Bold climate policies in the next 12 years are crucial to avoid the worst impacts of food and water scarcity, climate-related poverty, forest fires, eradication of species, and rising sea levels. Tackling climate change is simply not compatible with the pursuit of continued economic growth and timid regulations that prioritise corporate profits.

Fossil fuels sponsoring COP24

This year the Polish presidency kept the list of sponsors secret until the last minute. Only this week, the Polish Minister for the Environment, Henryk Kowalczyk, announced the first six sponsors, including no less than three coal corporations (JSW, Tauron, and PGE)! So far, all sponsors are Polish state-owned companies and beyond the coal corporations also include gas company PGnig, insurance company PZU, and PKO Bank.

With the summit in Katowice costing three times the amount of COP19 – close to €60 million – there is no doubt that the government is looking for help to settle the bill. This does not change the fact that Poland's invitation for sponsorship from these particular companies is scandalous:

PGE Group (Polska Grupa Energetyczna) is the largest state-owned Polish power company and the biggest coal-fired power plant developer in the EU. Among its power plants is the infamous Bełchatów coal (lignite-fired) plant in Poland, the biggest installation under the European Trading System (ETS, Europe's carbon market), the second largest fossil-fuel power station in the world, and biggest polluter in Europe. Belchatów is a source of considerable health and environmental problems including air and water pollution, contamination of soil, and an immense contribution to respiratory and other health impacts and a lower standard of living.
JSW is, like the rest of the sponsors, state-owned and is the largest producer of coking coal (used to produce steel) in the EU.
Tauron is another power company whose main source is coal and natural gas, despite their attempts to present a green image.
PGNiG is a gas giant who has very actively pushed for fracking and is renowned for using 'astro-turf' (ie false grassroots) campaigns to give shale gas the appearance of public support.

The core business of the other two sponsors may not be the extraction or use of fossil fuels, but they are still very connected with the oil and gas industry:

PKO Bank is the biggest bank in Poland and heavily engaged in fossil fuel-financing – including oil and gas stated owned majors.
Insurance corporation PZU insures their co-sponsors, coal companies Tauron, PGE and JSW, as well as gas company PGNiG. At the moment they are attempting to put together a consortium to insure Ostroleka C, a 1000MWe hard coal plant that the Polish Government is heavily pushing.

The Polish government inviting this oil and gas club to sponsor COP24 will give these industries airspace and, most likely, privileged access to the talks - at a time when the stakes could not be higher!

If we want to have any chance of keeping the average global temperature rise below 1.5C, as laid out in the Paris Agreement, we need to leave coal, gas and oil in the ground. This is hardly possible when those involved in the process for agreeing climate action are the same polluters which caused the climate crisis in the first place. To kick those who are profting from nearing climate chaos out of the negotiating sphere, we need a firewall between polluters and policy-makers. This is what the World Health Organisation already implemented with regards for the tobacco industry in the UN Framework Convention on Tobacco Control in an attempt to protect public health policy-making from the vested interests of the tobacco industry.

While the Poland-hosted COP24 seems to be going in exactly the wrong direction, the People’s Demands for COP24 are calling for real solutions: keeping fossil fuels in the ground and ending the corporate capture of the climate talks. Whether it is NGOs closely following the talks or grassroots movements increasing the pressure on their governments at home, civil society is working hard to stop the Polish government and its dirty energy sponsors from wrecking the UN talks - and our climate.

Keep an eye out for an upcoming in-depth profile of more corporate sponsors at COP24, which we we will be publishing alongside Corporate Accountability.

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The World Needs to Quit Coal. Why Is It So Hard?

By Somini Sengupta

https://www.nytimes.com/2018/11/24/climate/coal-global-warming.html

24 November 2018

HANOI, Vietnam — Coal, the fuel that powered the industrial age, has led the planet to the brink of catastrophic climate change.

Scientists have repeatedly warned of its looming dangers, most recently on Friday, when a major scientific report issued by 13 United States government agencies warned that the damage from climate change could knock as much as 10 percent off the size of the American economy by century’s end if significant steps aren’t taken to rein in warming.

An October report from the United Nations’ scientific panel on global warming found that avoiding the worst devastation would require a radical transformation of the world economy in just a few years.

Central to that transformation: Getting out of coal, and fast.

And yet, three years after the Paris agreement, when world leaders promised action, coal shows no sign of disappearing. While coal use looks certain to eventually wane worldwide, according to the latest assessment by the International Energy Agency, it is not on track to happen anywhere fast enough to avert the worst effects of climate change. Last year, in fact, global production and consumption increased after two years of decline.

Cheap, plentiful and the most polluting of fossil fuels, coal remains the single largest source of energy to generate electricity worldwide. This, even as renewables like solar and wind power are rapidly becoming more affordable. Soon, coal could make no financial sense for its backers.

So, why is coal so hard to quit?

Because coal is a powerful incumbent. It’s there by the millions of tons under the ground. Powerful companies, backed by powerful governments, often in the form of subsidies, are in a rush to grow their markets before it is too late. Banks still profit from it. Big national electricity grids were designed for it. Coal plants can be a surefire way for politicians to deliver cheap electricity — and retain their own power. In some countries, it has been a glistening source of graft.

And even while renewables are spreading fast, they still have limits: Wind and solar power flow when the breeze blows and the sun shines, and that requires traditional electricity grids to be retooled.

“The main reason why coal sticks around is, we built it already,” said Rohit Chandra, who earned a doctoral degree in energy policy at Harvard, specializing in coal in India.

The battle over the future of coal is being waged in Asia.

The world’s coal juggernaut

Home to half the world’s population, Asia accounts for three-fourths of global coal consumption today. More important, it accounts for more than three-fourths of coal plants that are either under construction or in the planning stages — a whopping 1,200 of them, according to Urgewald, a German advocacy group that tracks coal development. Heffa Schücking, who heads Urgewald, called those plants “an assault on the Paris goals.”

Indonesia is digging more coal. Vietnam is clearing ground for new coal-fired power plants. Japan, reeling from 2011 nuclear plant disaster, has resurrected coal.

The world’s juggernaut, though, is China. The country consumes half the world’s coal. More than 4.3 million Chinese are employed in the country’s coal mines. China has added 40 percent of the world’s coal capacity since 2002, a huge increase for just 16 years. “I had to do the calculation three times,” said Carlos Fernández Alvarez, a senior energy analyst at the International Energy Agency. “I thought it was wrong. It’s crazy.”

Spurred by public outcry over air pollution, China is now also the world leader in solar and wind power installation, and its central government has tried to slow down coal plant construction. But an analysis by Coal Swarm, a U.S.-based team of researchers that advocates for coal alternatives, concluded that new plants continue to be built, and other proposed projects have simply been delayed rather than stopped. Chinese coal consumption grew in 2017, though at a far slower pace than before, and is on track to grow again in 2018, after declining in previous years.

China’s coal industry is now scrambling to find new markets, from Kenya to Pakistan. Chinese companies are building coal plants in 17 countries, according to Urgewald. Its regional rival, Japan, is in the game too: nearly 60 percent of planned coal projects developed by Japanese companies are outside the country, mostly financed by Japanese banks.

That contest is particularly stark in Southeast Asia, one of the world’s last frontiers of coal expansion. What on Earth Is Going On?

'Even the trees are dying’

Nguy Thi Khanh has seen the contest close-up in Vietnam. Born in 1976, a year after the end of the war, she remembers doing homework by the light of a kerosene lamp. In her northern village, the electricity failed several hours a day. When it rained, there was no power at all. When it came, it came from a coal plant not far away. When her mother hung laundry to dry, ash settled on the clothes.

Today, pretty much every household in Vietnam, population 95 million, has electricity. Hanoi, the capital, where Ms. Nguy now lives, is in a frenzy of new construction, with soaring demand for cement and steel — both energy guzzlers. The economy is galloping. And, up and down the coast, 1,600 kilometers in length, foreign companies, mainly from Japan and China, are building coal plants.

One such project is in Nghi Son, a onetime fishing village south of Hanoi and now home to a sprawling industrial zone. The first power plant opened here in 2013. Japan’s overseas aid organization, the Japan International Cooperation Agency, paid for it. The Japanese trading house Marubeni developed it.

A second coal-fired power plant, far bigger, is under construction next door. Marubeni is building that too, along with a Korean company. The Japan Bank for International Cooperation, an export credit agency meant to lower financial risk for private lenders, is helping to fund it.

In the shadow of the smokestack, Nguyen Thi Thu Thien was drying shrimp on the side of the road and complaining bitterly. She had moved out of her house after the power plant built an ash pond right in front. “The coal dust has blackened my house,” she said. “Even the trees are dying. We can’t live there.”

She and the others drying shrimp on the road were doubly angry that the new plant would need a new port, and that would displace their husbands, who tie up their fishing boats there.

Trucks rumbled by, throwing up dust, as the women emptied their baskets of shrimp. They kept every bit of themselves covered: wide brimmed hats, face masks, gloves.

Coal accounts for 36 percent of the country’s power generation capacity now; it is projected to grow to 42 percent by 2030, according to the government. To feed those plants, Vietnam will need to import 90 million tons of coal by 2030.

But coal projects are also sparking community opposition rare in a country that squelches dissent. Villagers blocked a highway in 2015 to protest a Chinese project in the southeast. The provincial authorities quashed another proposed plant in the Mekong Delta.

Most plants in Vietnam use old, polluting technologies that many investors, including Marubeni, have recently promised not to back in future projects. A company spokesman said by email that it would continue with the Nghi Son project “to contribute to stable power supply and to economic growth.”

Vietnam says it is on track to meet its emissions reductions targets under the Paris accord. So, too, China and India, with far bigger carbon footprints. But those targets were set by the countries themselves, and they will not be enough to keep global temperatures from rising to calamitous levels. The United States has said it will exit the Paris climate pact.

Those sobering facts loom over the next round of international climate negotiations, starting Dec. 3 in the heart of Poland’s coal country. The American delegation plans to promote coal at the event, just as it did at last year’s talks in Bonn, Germany.

A potent political force

In the public imagination, the coal miner has long been a symbol of industrial virility, a throwback to an era when hard labor — particularly men’s labor, rather than robots — fueled economic growth.

That idea has been central to politics. German coal miners have lifted the fortunes of that country’s far-right party. Poland’s right-wing government has promised to open new coal mines. Australia’s prime minister, Scott Morrison, rose to power as a champion of coal.

President Trump has promised, unsuccessfully so far, to revive coal mining jobs and instructed his Environmental Protection Agency to roll back rules to reduce emissions from coal-fired power plants.

That message might be welcome in American coal country, but the industry’s future in the United States is not promising. There are cheaper fuels, including natural gas; gas now accounts for around 31 percent of total power generation in the United States, the same share as coal. China has imposed tariffs on coal imports from the United States, in the tit-for-tat trade dispute. More than 200 coal plants have closed since 2010, and coal consumption has continued to decline, contrary to Mr. Trump’s false claims. Coal mining jobs have plummeted over the last decade, despite a modest increase of about 4 percent in the first 18 months of the Trump presidency.

‘We have coal. We are producing more every year.’

The economics, and the political calculus, are very different in the world’s biggest democracy: India, population 1.3 billion.

Ajay Mishra, the career civil servant in charge of energy in the central Indian state of Telangana, knows firsthand.

Five years ago, he said, daily power cuts cursed his state. Ceiling fans cut out on stifling summer afternoons. Factories ran on diesel-guzzling generators. The people of Telangana were furious.

State officials had to do something to fix the electricity problem. They harnessed the sun, briefly making Telangana a leading solar power producer in India. They also turned to what government officials have relied on for over a century: the vast vein of coal that sat underground, stretching across the hills and forests of central India.

Telangana now has round-the-clock electricity. Its farmers get it free to pump water. It sweetens the re-election bid of Telangana’s top elected official, K. Chandrashekar Rao, in state polls later this year.

“We have coal,” Mr. Mishra said. “We are producing more every year. For the next 100 years we have it.”

On a warm Tuesday in October, about a four-hour drive from Hyderabad, the capital of Telangana, an army of men in indigo shorts went underground to dig it out.

A simple pulley drew them in, a bit like a ski lift, except here, it took them deeper and deeper down a shaft. The creak of the pulley was all you could hear, and water, drip-dripping inside the earth. Here and there, off to the side, stood miners, their forms barely visible in the darkness, except for the belted flashlights that snaked across their bodies.

At about 900 feet below the surface, where the air was black and cool and the coal under our feet was squishy, a burst of explosives broke down a wall of coal. Small, sooty chunks were piled into tubs and wheeled out, then loaded onto coal trucks that hurtled down the country roads, sprinkling a layer of ash everywhere.

So deeply is India invested in coal, this, like other mines, is state owned. So are most power plants. Coal subsidizes the country’s vast rail network.

That person at the top of that system, India’s prime minister, Narendra Modi, has sought to cast himself as a champion of clean energy.

But Mr. Modi has been inaugurating new coal mines, too. His government has made it faster for industry, including mining, to get environmental clearances, rankling environmentalists. India’s state-owned companies are building new coal-fired plants across the country, almost all of them financed by public sector banks.

In an interview in the capital, New Delhi, India’s energy secretary, Ajay Bhalla, said some 50 gigawatts of additional coal capacity were under construction. That’s a fraction of what was under development even a decade ago, when India’s energy demand was projected to soar. Many of those plants are meant to replace older, more polluting ones. But coal would not sunset anytime soon, he predicted, not until there’s a cheap and efficient way to store energy from solar and wind energy.

Analysts say India must retool its electricity grid for the post-coal era. Battery technology is fast advancing. Microgrids can replace traditional electricity systems. Many existing coal plants are now running below capacity, several are idle, and new energy efficiency standards could slow down demand to the point where there may be a glut of costly coal-fired plants. Left holding this bundle of stranded assets: The public sector banks that financed them.

For now, though, coal accounts for 58 percent of India’s energy mix.

“It’s not that I’m using the coal very willingly,” Mr. Bhalla said. “But I have to.”

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New report: Three years after the Paris climate summit, French banks are financing more coal

Friends of the Earth France press release

26 November 2018

Paris, France - In a report published today, Friends of the Earth France has called on French banks to immediately review their coal policies and introduce exclusions for companies developing new projects in this sector. The NGO has criticised the weakness of the current commitments of BNP Paribas, Société Générale, Crédit Agricole and Natixis which, since 2016, have provided more than EUR 10 billion euros in financing to companies which are gambling against compliance with the Paris Agreement on climate change. This figure represents an increase of 52% in coal financing from the banks compared to the three years prior to COP21.

As global finance institutions gather this week in Paris with the stated goal of building a sustainable financial system, the new report ‘COP21 + 3, French banks still in coal’, published today by Friends of the Earth France, reveals that French banks are still supporting the construction of new coal-fired power stations by massively financing the companies which are promoting these projects. [1]

Global capacity for coal-fired electricity generation has increased by 92 gigawatts since the adoption of the Paris Agreement in 2015 and 1380 projects are still planned today worldwide. [2] According to new financial data [3], BNP Paribas, Crédit Agricole, Société Générale and Natixis have granted more than EUR 10 billion in financing since COP21 to the 120 companies most aggressively involved in the construction of new coal-fired power plants. [4] This total is 52% more than the EUR 6.7 billion the banks provided in the three years prior to COP21.

This is due to the sectoral policies of the banks which strictly exclude only project financing, yet at the same time have only very low criteria for corporate financing. BNP Paribas, which accounts for almost EUR 4 billion in loans and issues of shares and bonds to the 120 companies, has taken measures which are clearly insufficient to directly restrict its support to companies which are highly active in the sector or which plan to increase their coal capacity.

Lucie Pinson, advisor to Friends of the Earth France’s private finance campaign, commented:

“French banks are refusing to exclude a certain number of companies based on the argument that instead they will support them in their efforts to realise the energy transition. We say that this should only apply for companies which are really trying to transform themselves in order to align with the 1.5°C trajectory.

“Those companies which are determined to build coal projects, which respected scientific and political authorities have repeatedly described as being strictly incompatible with the Paris Agreement, must be immediately jettisoned by French banks. To refuse to do so is to be responsible for the development of the sector responsible for the highest CO2 emissions and signals the failure of the climate objectives adopted in 2015 by the international community.”

While project finance has historically accounted for less than 10% of financing for the coal sector, the share of corporate finance provided for the construction of new coal plants is expected to grow due to the huge reputational risks associated with coal. This is particularly the case in Europe, where 66 projects are still planned, while all efforts should be aimed at the closure before 2030 of the 275 coal power plants in operation. [5]

Lorette Philippot, leading the private finance campaign at Friends of the Earth France, said:

“With EUR 1.8 billion and EUR 1 billion respectively in financing for European developers of new coal plants since COP21, BNP Paribas and Société Générale are the third and tenth largest international banks supporting companies blocking Europe in its energy transition. Among their customers are the German company RWE and the Czech company CEZ, whose coal activities 500 kilometres from Paris or Katowice, where COP24 will take place, threaten our climate, our health and even whole villages with destruction.

“The recent IPCC report on the consequences of warming to 1.5°C has shown that we have to accelerate our exit from fossil fuels. It is criminal to continue to finance not only coal companies, but also companies involved in tar sands and shale gas, as Crédit Agricole and Société Générale also continue to do.”

Published a few days before Climate Finance Day and COP24 in Poland, the report calls on banks to review their policies: French banks must commit to align their activities with a 1.5°C trajectory, immediately exclude companies which are expanding their activities in the coal sector or which are heavily active in or exposed to coal, and condition their support to other companies based on the adoption by 2020 of a detailed plan for the closure of their coal infrastructure.

Key figures from the report:

• More than 1380 coal-fired power plants are still planned worldwide, including 66 in Europe, which, if built, would increase overall installed capacity by more than 33%.
• 120 companies aggressively developing new coal plants account for 68% of the global pipeline of new coal-fired power plants and constitute the Coal Plant Developers List (CPDL).
• Since COP21 and the adoption of their coal commitments, BNP Paribas, Société Générale, Crédit Agricole and Natixis have increased their financing to the 120 coal developers from EUR 6.7 billion between 2013 and 2015 to EUR 10.25 billion between 2016 and 2018.
• BNP Paribas has recorded nearly EUR 4 billion in loans and issues of shares and bonds to these companies since COP21.
• While Crédit Agricole mainly finances Asian companies, BNP Paribas and Société Générale finance European coal developers, with respectively EUR 1.8 billion and EUR 1 billion in financing.
• BNP Paribas and Société Générale finance companies, such as Germany's RWE and Uniper or the Czech Republic’s CEZ, which are developing their mines and coal plants in Europe and which are openly blocking the continent’s exit from coal.

Oxfam France on Saturday published a report ‘French banks, fossils take the lead’ on French banks’ financing of all fossil fuel sectors (coal, oil and gas) and renewable energy.

For more information, contact:

Lorette Philippot, Private finance campaigner, Friends of the Earth France.
Tel: +33 6 40 18 82 84; Email: lorette.philippot@amisdelaterre.org

Notes for editors:

1. See the new report (French only) ‘COP21 + 3, French banks still in coal’.

2. See the press release (4 October 2018) from German NGO urgewald.

3. Financial research conducted by the independent research consultancy Profundo, commissioned by Friends of the Earth France, urgewald, BankTrack, Re: Common and Rainforest Action Network.

4. See the list of 120 top coal developers as defined by urgewald.

5. More information available at the Europe Beyond Coal website.