Coal still attracts billion of dollars in investment worldwidePublished by MAC on 2015-07-07
Source: Statements, Reuters, Guardian, Mining.com (2015-07-06)
Judging by the conclusions of a vital new medical report from The Lancet, global rejection of fossil fuels can't come soon enough, in order to save millions of lives. See: Lancing the boil of climate change
While a concerted withdrawal of investment in coal mining and coal-fired power generation isn't the only recommendation made in this direction, it's certainly one of the most important.
It's true that some banks are now refusing to back coal projects, even if this is largely for social and environmental reasons.
Last month, three French banks joined with two Norwegian funders in deciding not to finance a coal-fired power station in Bangladesh. Earlier this month, UNESCO's World Heritage Committee also warned of the project's potentially damaging impacts on the Sunderbans forest - the world's largest spread of wetlands.
Australia's biggest coal extraction, transportation and export project may also be in some jeopardy. India's Adani Corporation is reported to have halted work on the huge Carmichael mine which is integral to the scheme. And more than two thirds of a million people have called on the US Ex-Im Bank to publicly reject financing for it.
Still, these are only small indications of the vast transformations that must be implemented in order to heed the dire warnings sounded by The Lancet and many other scientists.
Following him is Roman Abramovich, the Russsian oligarch who has found a home in London. Also included is Ivan Glasenberg, whose London-listed Glencore trading colossus is now to set up a new entity to market its sales of the black stuff worldwide.
Viewing the sector from a complementary perspective, Market Forces has identified a huge disparity between Australian funding for coal, and that provided to promote renewable energy. It concludes that the country's four largest banks on average lend six times as much to the former as they do to the latter.
The OECD has, for the past year, been trying to reverse the tide of state financing for coal. But this has had only limited success, as some "developed" nations continue providing export credit guarentees to their own manufacturers.
The worst culprit has been identified as Japan which, between 2007 and 2014, handed out no fewer than US$20 billion in subsidies to Japanese firms exporting coal extraction technology.
French banks say no to Bangladesh coal plant
Three French banks say they will not invest in Rampal power plant in Bangladesh. As the plant struggles for funding, a report says it is non-compliant with minimum environmental and social standards
25 June 2015
Three French banks have said they will not invest in the Rampal power plant, Bangladesh. Six months earlier, two Norwegian pension funds pulled out their investments from India’s National Thermal Power Corporation that is building the project.
During his visit to Bangladesh on 6 June 2015, Indian prime minister Narendra Modi endorsed the 1,320 MW Rampal coal- based thermal power project. He said,
The 1320 MW Rampal power project is making progress in accordance with your laws and regulation. We can do more together in power sector , here and in India.”
Under an agreement signed in 2012, India’s largest coal power company, the state-owned National Thermal Power Corporation (NTPC) would develop the plant in Khulna division as a joint venture with Bangladesh’s Power Development Board.
Activists are concerned the plant, less than 10 miles from the protected Sundarbans mangrove forest, would lead to its environmental degradation from increased ship traffic, dredging, and pollution of air and water.
Before Modi arrived in Dhaka, activists urged the leaders of the two countries to stop the plant. On 21 May, the National Committee to Protect Oil , Gas, Mineral Resources, Power and Ports held a rally in front of the National Press Club. If the project wasn’t stopped, the secretary of the organisation said it would escalate the movement.
On 5 June, other organisations such as National Committee for Saving the Sundarban, Bangladesh Poribesh Andolan, Bangladesh Environmental Lawyers Association, and Poribesh Bachao Andolan renewed their call to scrap the plant.
Their fears are not unfounded. India’s first environmental rating of coal-fired thermal plants was published by the Green Rating Project of the Centre for Science and Environment, Delhi. Since NTPC refused to collaborate, the rating was based on primary data and publicly available information. In India, the company operates 25 thermal plants and a further nine under joint venture collaborations. Six of these plants scored poorly on environmental parameters, rating a mere 16 to 28% compared to the best possible rating of 80%.
Last month, three French banks declared they will not invest in the project. Stanislas Pottier, Global Head Sustainable Development of Crédit Agricole, said,
Crédit Agricole SA Group has no plans to finance the Rampal coal power plant, in Bangladesh, given our intervention rules and the risks associated with this project.”
While Jean-Michel Mépuis, Sustainable Development and Social and Environmental Responsibility Director of Société Génerale, said, Societe Generale does not provide any financial advisory services and is not currently contemplating any financing related to the Khulna coal-fired power project, located in Rampal, Bangladesh.”
BNP Paribas, one of the corporate sponsors of the UN climate summit to be held in Paris in December 2015, also declined to invest in the plant.
Bank Track, a coalition of organisations tracking the financial sector , released its analysis of the Rampal plant under the Equator Principles, an environmental and social risk management framework for financial institutions . In its executive summary, the reports says,
“The analysis shows that serious deficiencies in project design, planning, and implementation and due diligence obligations render the project non-compliant with the minimum social and environmental standards established by the Equator Principles, as well as the International Finance Corporation’s Performance Standards.”
This failure to achieve even minimum standards could make any financial institution nervous of funding the project.
Loans are expected to fund up to 70% of the $1.5b project, while India and Bangladesh will fund the remaining 30% equally. However, the Bangladesh Planning Commission refused approval. It said the project was not compliant with the country’s existing policy nor was the funding and ownership of the plant clear. This leaves even the 15% Bangladesh stake in the project uncertain.
Even before funds can be raised to build the first plant, the Bangladesh power Development Board has inexplicably started acquiring land for a second plant.
New UNESCO warning to potential financiers of Rampal coal plant
6 July 2015
Bonn, Germany - The UNESCO World Heritage Committee at its annual meeting in Bonn has yet again criticised the Bangladeshi government for failing to evaluate the impacts of the proposed Rampal coal plant on the Sundarbans World Heritage Site. In a blow to prospects for the coal plant, the Committee requested the Bangladeshi government invite a monitoring mission to the site, the first step towards placing the property on the World Heritage in Danger list. 
The World Heritage Committee decision is a further setback to the Rampal project promoters , a consortium comprising India's National Thermal Power Corporation (NTPC) and Bangladesh's Power Development Board, as they seek project finance of over $1 billion from international lenders. NTPC has already this year suffered a $56 million divestment from Norway's Global Pension Fund specifically on account of the risks of “severe environmental damage” that the Rampal project could inflict on the Sundarbans.
The Sundarbans is the largest mangrove forest in the world and forms a natural fence protecting the coastal belt areas of Bangladesh. It is estimated that over one million people depend on the Sundarbans for their livelihood, many of whom work seasonally as fishermen. The coal-based thermal power plant at Rampal will be located just 14 kilometres upstream of the Sundarbans Reserve Forest. The Bangladeshi government has justified the location of the project on the grounds that it is at a ‘safe' distance from the mangrove forest.
“This decision by the World Heritage Committee demonstrates how deeply concerned the Committee is about the potential impacts of the Rampal coal plant on the Sundarbans World Heritage Site,” said Yann Louvel of BankTrack. “It should be an alarm call for international banks that may be considering financing the coal plant. The Rampal coal plant has potential to cause serious damage to the world’s largest mangrove forest and one of the last remaining habitats for the Bengal tiger.”
Last year the World Heritage Committee expressed concern about the proposed construction of the Rampal plant at Khulna, in particular citing the lack of an assessment of the impacts of the proposed coal plant on the World Heritage Site and requesting the Bangladesh government to undertake a Strategic Environmental Assessment (SEA) “to ensure that cumulative impacts of developments in Sundarbans are adequately assessed ”. 
While the Bangladesh government submitted a report in February this year to the committee as requested, this year's UNESCO World Heritage Committee decision notes the ongoing lack of an SEA or other detailed studies on the likely impacts of the Rampal plant and other industrial activities on the World Heritage property. The Committee urges the government “to ensure activities [at the Rampal plant] are not conducted before the revised EIA is submitted to the World Heritage Centre and reviewed by IUCN.”
The decision further requests the Bangladesh government to invite a monitoring mission to the Sundarbans in order “to review the state of conservation of the property, and the potential impacts of the thermal power plant development and dredging of Pashur River”. Such a monitoring mission is the first step towards placing a property on the World Heritage in Danger list.
Yann Louvel continued : “The committee's view is a strong reminder to banks that there are huge, irreversible social and environmental risks involved in the Rampal project and that, worryingly, the project promoters and the Bangladesh and Indian governments are taking an overly relaxed approach to safeguarding the Sundarbans.
“With the project now desperate for financing , and efforts being ramped up to secure international lenders in the coming weeks, we're calling on other banks to follow the example recently set by three top French banks and declare that they're steering clear of Sundarbans devastation.”
In May, France's three largest banks , BNP Paribas, Crédit Agricole and Société Génerale, disclosed that they will not finance the Rampal project due to incompatibility with their policies and “the risks associated with the project”. A recently published BankTrack study has revealed that the potential environmental damage posed by the Rampal project means that it would breach many provisions of the Equator Principles, a set of social and environmental guidelines for project finance followed by 80 banks around the world. 
For further inquiries and interview requests, please contact:
Yann Louvel, Coal Campaign Coordinator, BankTrack: firstname.lastname@example.org + 33 688 907 868
Bangladesh coal plant “non-compliant with Equator Principles” shows new BankTrack analysis
“Big Three” French banks ruled out financing for Rampal project near Sundarbans World Heritage mangrove forest
29 June 2015
As the UNESCO World Heritage Committee meets this week in Bonn, Germany, a new report from BankTrack shows that the Rampal coal power plant, proposed for construction on the edge of the World Heritage Sundarbans mangrove forest in Bangladesh, would breach the Equator Principles, a set of guidelines for project finance followed by 80 banks around the world.
The report was published at the same time as a report in the Guardian newspaper which revealed that the three largest French banks, BNP Paribas, Crédit Agricole and Société Génerale, have said they will not finance the Rampal project. The move comes six months after two Norwegian pension funds withdrew from India's National Thermal Power Corporation, one of the companies involved in developing the plant.
"The analysis shows that serious deficiencies in project design, planning, and implementation and due diligence obligations render the project non-compliant with the minimum social and environmental standards established by the Equator Principles, as well as the International Finance Corporation's Performance Standards," states the report.
The Sundarbans is the largest mangrove forest in the world and forms a natural fence protecting the coastal belt areas of Bangladesh. It is estimated that over one million people depend on the Sundarbans for their livelihood, many of whom work seasonally as fishermen. The coal-based thermal power plant at Rampal will be located just 14 kilometres upstream of the Sundarbans Reserve Forest. The Bangladeshi government has justified the location of the project on the ground that it is at a ‘safe' distance from the mangrove forest.
BankTrack has assumed the Equator Principles apply to the Rampal coal plant as the project proponents are seeking project finance to proceed, total project capital costs far exceed the US $10 million threshold for application of the principles, and most importantly, because the project poses significant adverse social and environmental risks and impacts that are diverse and irreversible.
BankTrack is calling on the Equator Principles financial institutions (EPFIs) to follow the French banks and publicly rule out involvement in financing or support of any kind for the Rampal coal plant. "The failure to comply with these minimum standards are indicative of the social, environmental and financial risks the Rampal coal plant poses and make the project a clear "no-go" for EPFIs," states the report.
Adani halts work on Australia's Carmichael coal mine project - Guardian
23 June 2015
India's Adani Mining has asked its four engineering contractors working on the Carmichael project to halt work around the mine, the Guardian Australia reported, citing people familiar with the matter.
Halting work at this stage of the project made no sense even as a savings measure, and raises speculation that the Indian company might scrap the project altogether, Guardian Australia said.
Adani has signed up buyers for about 70 percent of the 40 million tonnes coal the Carmichael project is due to produce in its first phase, with production expected to begin in late 2017. Guardian Australia said it is understood that about 40 engineers working for one of Adani's contractors, WorleyParsons, were among those pulled off the project.
Tim Buckley, a director of energy finance studies, Australasia, at the Institute for Energy Economics and Financial Analysis, which opposes new coal developments said halting work at this stage "just crucifies the project", the newspaper reported.
SMEC, one of the contractors hired by Adani, declined to comment.
Adani and its other contractors Aecon, Aurecon and WorleyParsons could not be reached for comment outside regular business hours. Adani's ambitions in Australia have been uncertain following a surprise election result in Australia's coal-rich Queensland state, leading to a policy reversal, and heightened pressure to protect the Great Barrier Reef.
(Reporting by Ankush Sharma in Bengaluru)
Over 670,000 call on Ex-Im Bank to reject controversial Australian coal project
by Claire Sandberg
17 June 2015
Abbot Point coal export terminal would harm Great Barrier Reef, worsen global climate change
Photos from today’s petition delivery: http://bit.ly/1N2SjAu
Washington, D.C.—Activists from a coalition of environmental groups delivered over 670,000 petition signatures to the U.S. Export-Import Bank (Ex-Im Bank) today to call on the bank to publicly reject financing for the controversial Carmichael coal mining and export project in Australia. Activists rallied in front of Ex-Im Bank headquarters wearing blue clothing and clownfish hats and holding a coral reef-themed banner to demand that U.S. taxpayer dollars not be used to bankroll the project, which threatens Australia’s iconic Great Barrier Reef, as well as the global climate.
If built, the Carmichael coal mine, along with an associated export terminal at Abbot Point, would dramatically increase coal production and exports from Australia's Galilee Basin, one of the largest stores of coal on the planet. The plan for the new mine and port facility would make Australia the world's leading coal exporter, and lead to an estimated 705 million tons of carbon emissions annually. The project has faced fierce opposition, not only over its climate impact, but over the threats it poses to the Great Barrier Reef. Construction of the new export terminal at Abbot Point would require dredging part of the Great Barrier Reef World Heritage Area, in a plan that has prompted the United Nations Educational, Scientific and Cultural Organization (UNESCO) to consider placing the Great Barrier Reef World Heritage Site on its “in danger” list.
With the project receiving strong support from Australian Prime Minister Tony Abbott’s administration, campaigners have targeted investment banks to try and stop the project from gaining an estimated $16.5 billion in financing needed for the project to move forward. Eleven of the world’s leading private investment banks, including Citigroup, Morgan Stanley, Goldman Sachs, and JPMorgan Chase, have publicly ruled out providing financing to Indian conglomerate Adani Enterprises to build the project. But the U.S. Ex-Im Bank has thus far refused to take a position, amid reports that the bank may be considering a request for financing from Adani.
"If all the coal in the Galilee Basin is dug up and burned, it would have roughly the same carbon impact as burning all of the Alberta tar sands. In other words, we can't allow this project to move forward if we hope to keep climate change below 2C of warming," said Amanda Starbuck, Climate and Energy Program Director at Rainforest Action Network. "On top of that, construction of a new export facility at Abbot Point would require dredging part of the Great Barrier Reef World Heritage Area. Start to finish, this is a dirty, reprehensible plan that the Export-Import Bank should publicly reject. U.S. taxpayer dollars should not be used to bankroll Reef destruction and climate chaos."
“Already eleven major global banks, including the major lenders to Australian coal projects, have said no to this disaster of a project because they see that it ticks every risk box on the books,” said Charlie Wood, 350.org Australia campaigns director. “High levels of public concern about this project have already been demonstrated at the local, national, and international levels, with several million people having taken action to oppose them. This concern will only continue to grow. Ex-Im is placing its reputation on the line by refusing to take a position. They should rule out involvement now,” concluded Wood.
"It's clear that putting a price tag on one of the world's greatest natural treasures is simply not an option,” said John Coequyt, director of the Sierra Club’s International Climate Program. “Time and again, we've seen Big Coal dip its soot-covered fingers in the pockets of American taxpayers to finance dirty, dangerous projects. It's high time Ex-Im put an end to this wasteful cycle once and for all."
"It shouldn't take a PhD in ocean ecology for Ex-Im Bank to figure out it’s a bad idea to support another massive fossil fuel project inside one of the world's most important marine parks,” said Doug Norlen, senior manager of Friends of the Earth’s Economic Policy program. “It’s time for Ex-Im Bank to come clean and publicly declare they will not provide public subsidies to destroy a world heritage area.”
Regarding the U.S. Ex-Im Bank possibly helping to fund the Abbot Point coal port expansion in Australia, Ted Conwell of Climate First! strongly called for "the bank to disassociate itself from the project due to the massive negative effect it will have on global warming. If the coal port is expanded thereby allowing nearby coal mines to sell all their coal, the total CO2 emissions from the project could be three times the lifetime CO2 emissions created by the Keystone XL pipeline."
President Obama and Australian Prime Minister Tony Abbott have repeatedly clashed over coal, climate change, and the Great Barrier Reef. Abbott has called coal “good for humanity,” and has given strong backing to Abbot Point and other coal projects, while President Obama has publicly chided Australia for not doing more to address climate change or protect the Reef. Last month, after strong arm-twisting from the Australian government, UNESCO’s World Heritage Committee issued a draft decision not to designate the Great Barrier Reef as “in danger,” despite analysis from environmental groups showing the Reef has met as many as six out of the eight criteria needed to be added to the “in danger” list.
Claire Sandberg, Rainforest Action Network, 646-641-6431 claire[at]ran.org
Cindy Carr, Sierra Club, 202-495-3034, cindy.carr[at]sierraclub.org
Jenny Bock, Friends of the Earth, 202-222-0754, jbock[at]foe.org
Glencore to pay new entity in global chain to market coal
Sydney Morning Herald
22 June 2015
Swiss-based mining giant Glencore says it will pay a new entity within its global chain to market and distribute its coal as it moves to close its Singapore office.
The company, one of the world's largest producers and traders of resources from coal to copper, is currently under audit by the Australian Taxation Office for the low level of taxes it pays locally.
Glencore inherited a Singapore marketing hub via its acquisition of Xstrata in 2013.
In evidence to the parliamentary inquiry into corporate tax avoidance Glencore's Australian regional finance chief Nick Talintyre explained how Xstrata's coal marketing business has been integrated into Glencore's global coal marketing.
He said the Australian company would now sell its coal directly from its Australian operations to end customers.
Fairfax Media can reveal that the company will pay a third-party, within its global chain, a fee to do this.
A spokesman said Glencore was in the process of closing its Singapore coal marketing office and "new coal contracts will be directly between the relevant Australian mining company and end customer".
"Our global coal marketing function will market the coal and be paid an arm's-length marketing commission commensurate with this activity," he said.
During the Senate inquiry's hearing in Melbourne earlier this year, Glencore revealed it made a $US1.4 billion ($1.8 billion) loss in Australia for the 2014 financial year. The company posted $A13 billion in revenue and paid $77 million in tax.
Then later, in a written statement to the Senate economics committee, Mr Talintyre admitted that, as a result of previous tax audits, Glencore has paid an additional $42 million in tax (some of which is included within the $77 million).
The company claims billions in "losses" overseas and uses low-tax or no-tax nations. Glencore moved $US9 billion in sales to "related parties" offshore in 2014, down from $US10.7 billion the year before.
Bermuda, Singapore, the United Kingdom, Cayman Islands, Barbados, Kazakhstan and the Republic of Congo were among the nations it chose to buy and sell commodities and raw materials such as coal, copper, grains, oil seeds and cotton.
Glencore is among other miners including BHP Billiton and Rio Tinto that revealed at the inquiry they are under audit for the use of hubs in the low-tax nation of Singapore.
China sets new standards for coal conversion projects
David Stanway and Aizhu Chen
7 July 2015
Beijing - China's energy regulator has released new draft guidelines for projects that convert coal to oil or gas, aiming to commit the sector to the strictest possible environmental standards, it said on Tuesday.
Beijing is looking for alternative sources of growth for its struggling coal sector, with more than 80 percent of domestic mining firms making losses as a result of slowing demand and chronic overcapacity.
Environmental groups have warned that coal-to-gas (CTG) and coal-to-liquid (CTL) projects will do little to cut carbon emissions or reduce pollution.
In a bid to allay concerns about the environmental risks of the process, projects will only be permitted in regions with sufficient water resources, the National Energy Administration said.
It said that any new project needed to be consistent with China's overall plans to control coal consumption, and would be encouraged to prioritize the use of low-quality coals with high sulfur and ash content to reduce their use elsewhere.
CTL plants would be permitted to use a maximum of 3.7 metric tons of coal for each metric ton of oil produced, while CTG projects would have to use no more than 2.3 metric ton for every 1,000 cubic meters of gas produced, it said.
A decade ago, China encouraged miners and oil firms to establish CTL facilities in a bid to ease dependence on imported crude, and dozens of projects were planned.
But the government went cold on the technology in 2008 after global oil prices retreated, eroding the competitiveness of CTL. The technology also raised concerns about the use of scarce water resources in coal-rich regions like Ningxia and Inner Mongolia.
China's biggest coal mining firm, the Shenhua Group, launched a CTL project in Inner Mongolia in 2010. The firm aims to bring total capacity at the plant to 11 million metric tons a year by 2020.
(Reporting by David Stanway and Aizhu Chen, editing by William Hardy)
Roman Abramovich among 'dirty dozen' people with biggest stakes in coal
From Chelsea’s Abramovich to India’s Vinod Adani, here are the 12 super-rich individuals whose combined investments in coal equal China’s annual emissions
Damian Carrington and Caelainn Barr
15 June 2015
The Chelsea football club owner Roman Abramovich is among a super-rich list of 12 investors whose combined coal holdings are equivalent to the entire annual emissions of China, the world’s biggest polluter, a Guardian analysis has found.
Top of the “dirty dozen” list is Vinod Shantilal Adani, who has a $900m (£581m) stake in Indian coal giant Adani Enterprises. His share of the company’s coal reserves will produce 2GT of carbon dioxide when sold and burned, the same as India’s 1.2 billion people produce in a year. Adani’s company is also behind the vast Galilee basin coal project in Australia.
Second on the list is Abramovich. The Russian businessman’s $766m stake in Evraz, the steel and mining company, gives him ownership of about a quarter of Russia’s largest coal mine, the Raspadskaya coal complex in Siberia.
The mine’s coal reserves represent 1.5GT of carbon emissions, not far off the annual output of Russia itself. Two other Evraz owners, Alexander Abramov and Alexander Frolov also feature in the dirty dozen of coal owners.
Fourth place on the list of coal kings is Low Tuck Kwong, who owns 51% of Bayan Resources. That stake in eight Indonesian coal mines represents 1GT of future carbon dioxide emissions, more than Germany’s annual output. Bayan Resources is continuing to explore for more coal reserves.
Low is followed by Suleiman Kerimov whose 40% stake in Russian gold mining company Polyus Gold make him the major owner of the company’s coal reserves, estimated at 2.3GT by analysts at Fossil Free Indexes. Kerimov’s stake gives him 923m tonnes of future carbon dioxide emissions. Gavril Yushvaev and Oleg Mkrtchyan each hold about 19% of Polyus Gold, earning them places nine and 10 on the dirty dozen list.
Glencore Xstrata, the global mining giant, provides two entries. Chief executive Ivan Glasenberg has a $4.6bn stake in Glencore, but as coal mining is a relatively small part the company’s business, his personal coal-related carbon footprint is less than that of Adani or Abramovich, equivalent to 900m tonnes of future carbon emissions.
Glasenberg recently dismissed concerns that any of Glencore’s huge reserves of coal would be left worthless by international climate change action to cut greenhouse gases, saying he did not believe governments would act in the face of growing demand for cheap energy. Glasenberg’s Glencore colleagues Daniel Badenes and Aristotelis Mistakidis take 11th and 12th place on the dirty dozen list, with stakes representing 340m tonnes of CO2 each, about the same as France or South Africa emits in a year.
Vadim Danilov, in 10th, completes the dirty dozen list, thanks to a relatively modest $25m stake in Kuzbass Fuel, also called KTK, which owns mines in Siberia and claims to produce over half the coal in Russia. But his 15% stake gives him ownership of 391m tonnes of future CO2 emissions, the same as Australia or Italy emit in a year.
The Guardian’s analysis used data from Reuters retrieved on 25 April 2015 to determine the ownership of the top 50 publicly traded coal companies, as ranked by Fossil Free Indexes on the basis of the coal reserves held by each company.
Top 12 individuals
CO2 in coal reserves owned (billion tonnes) | Stake ($m)
Vinod Shantilal Adani | 2.09 | 897
Roman Abramovich | 1.52 | 766
Alexander Abramov | 1.06 | 767
Low Tuck Kwong | 1.01 | 919
Suleiman Kerimov | 0.92 | 3,807
Ivan Glasenberg | 0.90 | 4,667
Alexander Frolov | 0.53 | 383
Gavril Yushvaev | 0.44 1,824
Oleg Mkrtchan | 0.42 | 1,583
Vadim Danilov | 0.39 | 25
Daniel Badenes | 0.34 | 1,768
Aristotelis Mistakidis | 0.34 | 1,757
Australian banks: New Report highlights gulf between renewable and fossil fuel financing
ANZ confirmed as Australia’s biggest fossil fuel lender
Market Forces press release
18 June 2015
Melbourne - A new report from Market Forces shines a light for the first time on Australian banks’ financing of the fossil fuel industry and the disparity between lending to ‘clean’ and ‘dirty’ energy.
Covering over 150 financial institutions, the report – Fueling the Fire – identifies ANZ as the leading lender to fossil fuels, having provided $12.6 billion to coal, oil and gas in Australia since 2008.
With Commonwealth bank loaning $9.9 billion, National Australia Bank $8.3 billion and Westpac $5.9 billion, Australia’s “big four” banks have lent $36.7 billion to the fossil fuel sector in Australia since 2008. This accounts for over a quarter of the $135 billion made in loans to the sector since that date.
“This report leaves no doubt that Australia’s big banks are the lynchpin of major fossil fuel projects in Australia. With the ‘big four’ involved in three quarters of the deals to take place in the sector, it’s highly unlikely that any major polluting project could go ahead without their investment”, said Market Forces Lead Campaigner Julien Vincent.
The report also compares the big four banks’ lending to renewable energy against its support for fossil fuels. For every dollar loaned to renewable energy, the “big four” loaned an average of $6 to fossil fuels. Commonwealth Bank performed the worst of the big four, lending thirteen times as much to fossil fuels between 2008 and 2014 as it did to renewable energy.
“Banks have a pivotal role to play in driving our economy to one that is less carbon intensive, but despite the fact that globally, investment in new renewable energy is outstripping that for fossil fuels, Australian banks remain heavily skewed in favour of greenhouse intensive projects,” said Vincent.
“That our own money is being used to sabotage our future will come as a shock to the overwhelming majority of Australians who want to see action on climate change and icons such as the Great Barrier Reef protected from proposed new coal export projects. While the banks publicly herald their sustainability credentials, their lending practices tell an entirely different story.”
The report also highlights the increasing risk of exposure to potential stranded assets in the fossil fuel sector.
“Examples such as the $900 million sunk by the big four into Wiggins Island Coal Export Terminal demonstrate that the risk profile of fossil fuel projects is heightening,” said Vincent. “The likelihood for assets to become stranded means the risks of investment are becoming as much financial as environmental. This should surely at the centre of any potential funding decisions by banks with regards to the Galilee Basin and its associated infrastructure.”
The report can be found at: www.marketforces.org.au/fuelingthefire
Note: Dollar amounts quoted refer to Australian dollars.
For further inquiries and interview requests, please contact: Julien Vincent, Lead Campaigner from Market Forces on +61 419 179 529 or James Lorenz from Holdfast Communications on +61 400 376 021
Coal miners First Arch, Peabody hit by lawsuits over retirement plans
15 June 2015
Peabody Energy, the world's largest private-sector coal producer, has been hit with a class action lawsuit that claims its managers lost tens of millions of dollars from its employee retirement plan through risky investments in the company’s own stock.
The suit, led by a former employee, comes just two days after a similar court action against Arch Coal’s, St. Louis Business Journal reports.
Both U.S. coal companies, already hit by the effects of depressed commodity prices, saw their stock collapse not just on these news, but also amid concerns that they will have to pay more for insurance that covers environmental damage.
"The Wyoming Department of Environmental Quality’s Land Quality Division is reviewing 2014 financial data from Peabody and Arch to see if they still qualify for a “self-bonding” program that allows coal producers to cheaply insure their clean-up costs in case of bankruptcy", Kimber Wichmann, an economist at the department, told Bloomberg.
Peabody fell 9% to a record low closing price of $2.53 in New York on Friday and the stock was changing hands at $2.48 on Monday morning. Peabody has lost almost 23% of its already low-value since Thursday.
Arch, in turn, dropped 12% to an all-time low of 39 cents, but it was trading slightly higher at 40 cents on Monday.
They are not the only U.S. coal miners struggling these days. Analysts agree that Obama administration’s signature plan to slash carbon emissions from power plants will deal a hefty blow to most local producers. The proposed rules would require states to reduce their carbon footprint by up to 30%, below the levels of 2005, by the year 2030. The U.S. Environmental Protection Agency (EPA) is likely to make a final decision on the proposition by August this year.
As a result, coal production in the U.S. could drop to levels not seen since the 1970s, federal energy analysts warned last week.
Spot prices for steelmaking (or coking) coal have plummeted to US$85 a tonne in recent weeks.
Rich nations in stalemate over coal subsidy phase-out
15 June 2015
Talks on phasing out a form of coal subsidies ended in stalemate as Japan, the biggest user of the aid, led calls for more time in defiance of this week’s G7 pledge on fossil fuel subsidies, sources said.
The Paris-based Organisation for Economic Cooperation and Development has been trying for a year to get an agreement from its 34 member nations on phasing out export credits for coal, the most polluting of the fossil fuels.
Sources close to talks in Paris on Wednesday and Thursday, speaking on condition of anonymity, said nations would review the situation over the summer ahead of further talks in September.
An OECD spokesman, who asked not to be identified, confirmed the OECD’s export credit committee planned to meet in September to debate further how “export credits can contribute to our common goal to address climate change”.
The pressure for a deal is strong, but so is opposition, especially from Japan, the biggest user of the credits that help companies such as Toshiba Corp to sell coal plant and mining technology abroad.
France, which late this year hosts U.N. climate talks, is pushing for strict criteria, while G7 leaders of the world’s major industrial democracies on Monday backed a target to limit the average rise in global temperatures to 2 degrees Celsius (3.6 degrees Fahrenheit).
The G7 leaders pledged to eliminate “inefficient fossil fuel subsidies” and to “continued progress in the OECD discussions on how export credits can contribute to our common goal to address climate change”.
But that can be interpreted to allow export credits to continue in some form.
Industry argues they ensure only the most efficient coal-fired generation is used and that can cut emissions in nations that might otherwise use more polluting technology.
Environment campaigners dispute that.
“The main beneficiaries are OECD dirty industry, not energy poor nations or the planet,” Sebastien Godinot, an economist at WWF, said.
As other subsidies have disappeared, OECD export credits have increased in significance, according to research by environmental campaigners, including WWF.
Their analysis of the numbers available found Japan provided around $20 billion in public money to export of coal technology between 2007 to 2014. In the European Union, Germany is the largest user.
A German economy ministry spokeswoman said Germany supported the OECD’s efforts to agree unified standards for export credits in line with the 2 degree Celsius limit.
“Export credit guarantees should only be available for new, highly-efficient coal powered stations and only then if the power stations are embedded in and coherent with the importing country’s climate protection strategy,” she said.