Global financial institutions are turning a blind eye to and undermining the Paris Agreeement when it comes to phasing out coal-based energy production.
According to new research by Urgewald, BankTrack and 30 others, between January 2017 and September 2019, banks and other financial institutions have lent finance and provided underwriting services to 258 coal plant developers globally. According to Heffa Schuecking, Director of Urgewald, this has amounted to channelling of $745 billion.
The UN Secretary-General, the IPCC and climate scientists worldwide have called for a speedy phase-out of coal-based energy generation. Countries, including India — the world’s third-largest emitter of climate-warming greenhouse gases, have committed to reduce energy emissions intensity by 30-35 per cent from their 2005 levels, by 2030, and to increase the share of non-fossil fuel energy to 40 per cent of India’s energy mix by 2030.
Since January 2017, 307 commercial banks have provided $159 billion in direct loans to coal plant developers. The top three lenders are the Japanese banks, Mizuho, which has financed projects worth $16.8 billion; Mitsubishi UFJ Financial Group, $14.6 billion; and the Sumitomo Mitsui Banking Corporation, $7.9 billion. The fourth and fifth largest lenders to coal plant developers are Citigroup with $5.7 billion and BNP Paribas with $4.3 billion.
A regional breakdown of the data shows that Japanese banks accounted for 32 per cent of the direct lending to coal plant developers since 2017.
“Most of the top banks providing loans or investment banking services to these companies acknowledge the risks of climate change, but their actions are a slap in the face of the Paris Climate Agreement,” says Greig Aitken, climate campaigner at BankTrack.
European banks accounted for 26 per cent of all loans to coal plant developers since 2017. While leading European banks, including BNP Paribas and Barclays, ruled out direct project financing for new coal plants, these institutions continued to provide corporate loans to companies that were pushing forward new coal plants.
Ironically, Spanish bank Santander, one of the main sponsors of the 2019 UN Climate Summit in Madrid, is also party to this.
Carlota Ruiz-Bautista, an environmental lawyer from Instituto Internacional de Derecho y Medio Ambiente (IIDMA), said : “Santander claims it will not provide direct financing to new coal plants, but in 2018 and 2019 the bank made corporate loans totalling $655 million to PGE, Tauron and Energa, three companies that are planning to build 5.7 GW of new coal-fired capacity in Poland.” In fact, the data shows that the bank has increased its coal developer financing year-on-year since 2017.
With energy demands increasing, altogether, there are still over 1,000 new coal power stations or units in the pipeline. If built, these projects would add 570 GW to the global coal plant fleet, an increase of 28 per cent.