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Banks say they’re getting tough on coal, but they’re still lending billions to polluters

Coal, the most carbon-emitting and polluting source of energy, is the biggest contributor to man-made climate change. Global coal-fired power generation rose 9% last year to a record high.

Over the past three years, commercial banks have injected $1.5 trillion into the sector, according to a recent report by green campaign groups Urgewald and Reclaim Finance as well as more than two dozen other NGOs.

According to the study, the main coal lenders are Japanese financial group Mizuho, ​​Barclays, Citi and JPMorgan Chase. All four banks are members of the UN Net Zero Banking Alliance and have committed to aligning their portfolios to net zero carbon emissions by 2050.

Topping the list was BlackRock, which held 9% of global coal stocks. About $110 billion of its equity is invested in coal-producing companies and $34 billion is invested in companies building new coal-fired power plants, according to the report.

BlackRock’s holdings represent a small percentage of its $10 trillion in total assets under management, but the coal developers in BlackRock’s portfolio have plans for new projects equivalent to the power capacity of the whole world. coal in Russia, Japan, Indonesia, Poland and Germany combined.

BlackRock declined to comment.

There is a “massive disconnect” between the green rhetoric of the biggest financial institutions, their climate commitments and net zero commitments, and their actual financing practices when it comes to the development of new fossil fuels, said Ben Cushing, director from Sierra Club’s Fossil-Free. Fundraiser.
Citi, JPMorgan Chase, Bank of America and Wells Fargo all increased their funding of the 30 largest coal companies between 2016 and 2021, a report published last week by the Rainforest Action Network and six other NGOs. Major banks lent $742 billion to the fossil fuel industry in 2021, down a bit from $750 billion in 2020, he said.

JPMorgan Chase, Citi, Wells Fargo and Bank of America are the world’s top four fossil fuel funders, according to the report, with Morgan Stanley and Goldman Sachs rounding out the top 14. Together, these six US banks provided 31% of all financing linked to fossil fuels since the Paris Agreement of 2015 and 29% of all financing identified in 2021. The six banks are part of the Net Zero Alliance.

Some investors have had enough: The six largest U.S. banks will face investor resolutions over funding fossil fuel companies at their annual shareholder meetings this spring.

Slimy politics

Bank policies on coal financing typically have loopholes that allow financing to continue through multiple channels. Banks may restrict funding for specific projects involving coal, but do not rule out general-purpose loans or deals for an entire company.

Some banks won’t fund a company that derives more than 25% of its revenue or production from coal, but some of the world’s largest coal developers are massive, diverse organizations. Glencore, one of the largest coal producers and exporters in the world, has only 24% of its industrial turnover from fossil fuels in 2021. The rest came from the mining and marketing of copper, zinc and other metals.

Many banks produce intermediate targets based on measures of carbon intensity, measured as total carbon emissions divided by the total number of units of production or economic activity. “It’s a tricky trick and it doesn’t mean their total emissions are going down,” Cushing said. If you fill your car with a low-emission form of gasoline, but drive twice as far, your emissions intensity will be lower, but your net emissions will remain the same.

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Companies often say they need time to assess client portfolios and figure out how to continue working with them

“It’s not rocket science,” said Ted Nace, founder and executive director of Global Energy Monitor, an NGO that tracks fossil fuel and renewable energy projects around the world. The energy sector is able to take quick and decisive action when under pressure, even if it is expensive.

Exhibit A: Western oil and gas companies severed ties with Russia almost immediately after the invasion of Ukraine, proving that even the biggest companies can quickly dump toxic assets.

give us time

A spokesperson for the United Nations’ Net Zero Banking Alliance (NZBA) said comprehensive transition plans “will take years to plan and execute”. Many alliance members are only months away from their net zero pledges in 2021, the spokesperson said.

An immediate divestment from existing fossil fuel positions could lead to “extreme market shocks” that could “have a profound impact on the world’s most vulnerable people”, the spokesperson added.

Europe finally comes after energy from Russia

Other financial institutions contacted by CNN Business asked to speak on the merits, did not respond, or simply sent links to their publicly available coal and net-zero policies.

BlackRock has divested from all companies that derive a quarter or more of profits from thermal coal in its $2.6 trillion actively managed strategies. The majority of the company’s $10 trillion under management is held in passive funds to which the coal policy does not apply.

But time is running out.

This week, the United Nations Intergovernmental Panel on Climate Change issued a stern warning: the world must reduce its coal consumption by 95% within 28 years to avoid climate chaos.
If carbon emissions don’t come down significantly over the next few years and the planet continues to warm at the current rate, expect to see “big cities under water, unprecedented heat waves, terrifying storms , widespread water shortages, the extinction of a million species of plants and animals,” said UN Secretary-General António Guterres.

It’s not everything about money, especially

A recent report from London-based energy and climate think tank InfluenceMapfound that the world’s 30 largest financial institutions are all owned by industry associations “that have consistently lobbied to weaken key sustainable finance policies” in the European Union, Britain and the United States.
Coal retains political power in the United States. The United States is the third largest consumer of coal in the world. When 40 countries signed a pledge to phase out coal over the coming decades at the international climate talks in Scotland in 2021, the United States did not sign.

Global coal-fired power generation rose 9% to a record high last year, and U.S.-based Peabody Energy, the world’s largest private coal producer, had its most profitable first quarter ever. its history this year.

UN climate crisis report confirms world already has solutions, but politics stands in the way

Russia’s invasion of Ukraine and a possible ban on Russian coal in the European Union have also made coal an extremely profitable commodity. This week, US coal prices rose above $100 a ton for the first time in 13 years in response to supply shortage fears. The cost per ton was around $54 at this time in 2020, when Russian coal accounted for around 18% of all global exports.

“This could be a watershed moment for the world,” said Natasha Ion, climate activist at BankTrack, an NGO focused on tracking banks and the activities they fund. “We are already seeing markets change in response to Russia. I urge banks not to increase fossil fuel financing as a result.”