May 01, 2013
US Banks Continue to Finance Coal
by Robert Kropp
Despite the coal industry's leading impact on climate change and the bankruptcies of several
operators of coal-fired power plants, US banks continue to finance mountaintop removal and the
construction of new plants.
The Rainforest Action Network (RAN), the Sierra Club, and BankTrack have released the fourth Coal Report Card, an annual analysis of the
funding of mountaintop removal (MTR) and coal-fired power plants by US banks.
Each edition thus far has detailed how
despite commitments made through the Equator Principles, whose signatories agree to bring
the management of environmental and social risks to Project Finance transactions, US banks continue
to provide billions of dollars in funding for the environmentally destructive coal industry.
Identifying Bank of America, Citigroup, and JPMorgan Chase as having financed $9 billion for
MTR and coal-intensive power utilities in 2012, this year's report states, "The environmental
policies and due diligence processes at these banks have had little measurable effect on their
financing practices." Referring to the findings of a 2011 study by the Harvard School of Public
Health, the report continues, "Coal mining and combustion in the US imposes between a third to over
a half of a trillion dollars in externalized environmental and health costs each year."
Overall, US banks provided almost $21 billion in financing for the coal industry in 2012.
The lack of measurable improvement since last year's Coal Report Card seems even more
inexplicable when one considers that coal power is increasingly viewed as an industry in decline.
"In 2012, the coal industry struggled in the face of declining domestic coal demand," the report
For example, the report continues, "An equal-weighted stock portfolio of the 13
companies with MTR production profiled in this report would have lost 40% of its value between
April 2012 and April 2013. As of April 2013, only one had a Standard & Poor's credit rating above
As for financing coal-powered power plants—several operators of which have
declared bankruptcy, with more likely to follow—the report makes the following recommendations:
• Adopt meaningful carbon intensity or absolute carbon emissions targets for new power
• commit to disclosing greenhouse gas (GHG) emissions from bank lending
and underwriting portfolios:
• reduce financed emissions from lending and underwriting
by 20% by 2020;
• expand due diligence processes; and
• engage with power sector
clients on climate risk.
"Rather than clinging to a shrinking industry until the bitter
end, US banks should follow the lead of their European counterparts by planning ahead for a
carbon-constrained future and seeking new opportunities in low-carbon energy sources," the report
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