News out this week that four major UK banks continue to prop up coal, is hardly a surprise given that major policy reforms have been pushed at these banks for the past 4 or 5 years with little effect. HSBC in particular adopted a posture to no longer fund coal plants in 2018, but added the exceptions of Bangladesh, Vietnam, and Indonesia. In total Greenpeace has simply located £25 billion of loans to build coal plants placed from 2016 to 2019.
The truth is that coal plants aren’t “bankable” a label usually used to deny renewable energy projects from funding when they cannot prove their payback. Coal clearly cannot prove a payback beyond 2050 and these banks lose will lose a lot of money – and their shareholders should hold them to account.
It must be obvious to anyone that coal is on its last legs, and especially in poor countries, where every penny of household income spent on fuel is significant, the cheaper forms of energy such as solar, are way more appealing. The idea that Bangladesh actively “wants” coal and therefore global warming, is insane. It is one of the most threatened countries by climate change and already floods annually with many hundreds of deaths from flooding each year. It is the high up front cost of renewables which make coal attractive by comparison, when the countries should look at the total lifetime cost of ownership.
If the Bangladesh people fully understood warming, they would fight to prevent more coal plants, which are purchased purely to dump coal plant machinery from nearby countries (such as China) who have already begun reigning in coal spending, but are happy to export the problem to neighboring countries. So Bangladesh should have been the rule, not the exception for the banks.
But banks are largely a rule unto themselves, and only legislation, shareholder action and heavy financial penalties are likely to change their attitudes. Over the coming three decades, we will need coal, then gas, then oil, banished in the same way, and will need the help of globally expansive banks like HSBC to support each step of the way. So Governments must find a way to control banks’ behavior.
The other UK banks denounced by Greenpeace this week included Barclays, Standard Chartered and the Royal Bank of Scotland.
It was agreed in the Paris Climate accord that world leaders would force finance flows towards a pathway of lower greenhouse gas emissions – but there has been no single piece of climate banking legislation in the Western World that we know of.
HSBC has provided £8.4 billion for coal, with Standard Chartered providing £7.4 billion; Barclays £7 billion and state-owned Royal Bank of Scotland £1.8 billion.