Mountain top coal removal - is Bank's new policy merely a ploy?Published by MAC on 2008-12-22
The Rainforest Action Network (RAN) recently hailed a decision by the Bank of America to "phase out" its loans to companies practicing "mountain top" removal in the eastern USA. See: http://www.minesandcommunities.org/article.php?a=8960
It was a move which RAN itself now recognises "doesn't go far enough", while the US National Mining Association (NMA) has dismissed it as a "bit of a Public Relations' ploy."
Nonetheless, the NMA is worried that the Bank's initiative made create a "ripple effect" among other financiers.
Coal industry: Bank of America policy opposing mountaintop mining an
ill-timed PR stunt
5th December 2008
NEW YORK - Bank of America says it will phase out financing of coal companies that predominantly use destructive mountaintop removal mining practices, citing concern for the environment. But the policy, buried in the company's Web site this week and barely acknowledged by its public relations department, may be little more than show.
An Associated Press review of annual reports for some of the largest U.S. producers suggests few get more than half their coal from mountaintop mines, and few borrow significant amounts of money from the North Carolina-based lender.
"I have not received word from any of our member companies that this affects them," Carol Raulston, spokeswoman for the National Mining Association, said Friday. "I think it was a bit of a public relations ploy at a time when there's a lot of press attention on mountaintop removal."
Earlier this week, Bank of America announced a $1 million grant to Harvard University to help develop a carbon capture and storage plan. The donation is part of the bank's $20 billion, 10-year initiative "to address climate change through lending, investing, the creation of new products and services, operations and philanthropy."
It also posted a five-paragraph coal policy online, pledging to "phase out financing of companies whose predominant method of extracting coal is through mountain top removal."
Spokeswoman Colleen Haggerty, however, refused to elaborate on how the phase-out would work, how many companies it would affect or how much of its business involves coal industry financing.
"Bank of America intends to see all existing commitments and obligations through to maturity," she wrote in an e-mail. "We will be communicating with impacted clients to provide each company with sufficient time to address the implications of our coal policy."
Chris Hamilton, vice president of the West Virginia Coal Association, said no members are worried about their relationships with Bank of America, "but there is some concern over the grandstanding on this issue."
And the "precedent-setting nature" that worries Hamilton is what makes the policy potentially powerful, said Dan Bakal, director of electric power programs with Ceres, a Boston-based group of investors, environmental groups and public interest organizations.
"Will this step alone lead to dramatic change? Probably not," Bakal said. "What it does is demonstrate a bank thinks it can do this. That puts pressure on another bank to say, 'Well, why can't we do this?' It starts to have a ripple effect."
Earlier this year, three investment banks announced new non-binding environmental standards to help lenders evaluate risks associated with investments in coal-fired power plants.
The Rainforest Action Network, which pressured Bank of America for a policy, sees it as a good first step that doesn't go far enough.
"The language is vague, and we have a lot of questions," said Rebecca Tarbotton, director of global finance campaigns. "This is a small step, but what it does is indicate we have leverage.
"These banks are tremendously vulnerable to reputational risk," she said. "And as more and more people are shining the light on the fact that these big banks are implicated in mountaintop removal, they are realizing they have to do something."
Still, NMA considers the policy ill-timed, given the lousy economy and the fact that 14,000 jobs in Appalachia depend on mountaintop mines.
It also comes the same week the Environmental Protection Agency approved a rule clarifying when companies can dump coal mining waste in streams, a move activists consider a parting gift from the Bush administration.
Mountaintop removal, a form of strip mining maligned by environmentalists, is done mainly in Virginia, West Virginia, Tennessee and Kentucky. An EPA study estimated the practice wiped out 400,000 acres of forest and buried nearly 724 miles of streams between 1985 and 2001, alone.
Securities and Exchange Commission filings show Bank of America participates in loans to seven major companies involved in mountaintop mining: Massey Energy Co., Alpha Natural Resources, International Coal Group, Foundation Coal Holdings, Arch Coal, Consol Energy and Patriot Coal Corp.
A review of their annual reports and other records shows most get less than half their production from surface mines.
West Virginia-based ICG reported 62 percent of its coal came from surface mines last year, but didn't distinguish between mountaintop removal and other forms of surface mining, which the company uses.
ICG said Friday the bank is "sadly misinformed" about the mining practice and acted "on the basis of biased and superficial information provided by organizations with the end goal of stopping all coal mining."
Associated Press writer Tim Huber in Charleston contributed to this report.