Environmentalists may be working overtime to chase coal out of the power generation mix, but banks and other investors are still running after returns by financing projects globally.
Even without any major projects planned in the U.S. or most wealthy nations, worldwide investment in coal power projects neared three quarters of $1 trillion over the past three years since the Paris Climate Accord, according to a new CoalExit report by carbon reduction advocates BankTrack, Urgewald, IDMA and 350.org. The findings will be discussed Saturday during sessions at the United Nations Climate Summit in Madrid.
Altogether, the report noted, more than 1,000 new coal-fired power stations or units are in the planning or construction phases globally. If built and commercial operational, those plants could add 570 GW to the worldwide coal-fired capacity.
“The UN Secretary General, the IPCC and climate scientists worldwide have time and again called for a speedy phase-out of coal-based energy production, but most financial institutions are still turning a deaf ear,” said Heffa Schuecking, director of Urgewald, which puts out the Global Coal Exit List. “Over the past three years, financial institutions have channeled $745 billion (U.S.) to companies planning new power plants.”
The top 3 lenders for coal-fired generation projects are three Japanese banks: Mizuho, Mitsubishi UFJ Financial Group and the Sumitomo Mitsui Banking Corp. combining for more than $39 billion worth of investment, followed by Citigroup and BNP Paribas ($5.7 billion and $4.3 billion, respectively).
Overall, Japanese banks accounted for about 32 percent of the direct lending for coal-fired power projects since 2017, according to the report. European institutions were not far behind at 26 percent.
Much of that coal-fired financing is going into projects in the developing world. India, for instance, expects that it’s coal generation output will rise about 22 percent in coming years, even though the cost of importing resources could prove more expensive.
A recent story by Reuters estimated the China has built and completed 42.9 GW of new coal-fired capacity since the state of 2018, with another 120 GW under construction. If those numbers are accurate, the total nearly triples what was added in 2016 and 2017.
A United Nations report, quoted in Power Engineering earlier this year, indicated that Bangladesh plans to triple its coal-fired capacity to more than 18 GW and nearly 40 percent of its electricity mix by 2041.
Yet another report by Bloomberg NEF find that investment in developing nations for coal power fell 10 percent last year, but generation and consumption leaped by a tenth to 6,900 TWh in the same period.
The environmentalist financial reporters, no surprise, are alarmed by these statistics and the money behind those projects. The top capital firm behind coal plants developers is actually U.S.-based BlackRock, which holds bonds and shares worth around $17.6 billion spread out among more than 80 projects, according to the report.
BlackRock is also known as a major shareholder in numerous coal mines, including Arch, Glencore, BHP Billiton, Coal India and more. Those assets are in the U.S., South America, India, Africa, Philippines and Australia.
Friends of the Earth US advocate Doug Norlen accused investors like BlackRock of hypocrisy in the battle over climate-change policies.
“Last April, the world’s largest asset manager published a new tool to help investors identify climate-related risks in their portfolio,” Norlen said in the BankTrack report. “Through its reckless investments in coal plant developers Blackrock, however, plays a major role in fueling these risks.”
A prevailing counter argument, however, has been that developing nations are desperately in need to advancing their electricity power sectors, often to reach citizens who don’t have any power at all. A Forbes op-ed by energy economist Tilak Doshi earlier this year challenged the notion that killing coal-fired power will improve public health or that renewable energies can effectively replace fossil fuel-fired generation.
“Ambient air pollution in both urban and rural areas in developing countries is a real problem, but it is primarily due to the indoor burning of solid biomass in cooking and heating. The use of charcoal, wood, dung and crop residues within households is caused by the lack of access to grid electricity and modern fuels such as LPG,” the Forbes article reads.
“Coal power plants also lay the basis for improved public health with adequate clean water supply and refrigeration for food supply chains and the storage of vaccines in hospitals,” Doshi wrote.
In U.S., however, coal-fired retirements could exceed 30 GW for the past three years.
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(Rod Walton is the content director of Power Engineering and POWERGEN International. He can be reached at 918-831-9177 and [email protected]).
The Future of Coal-Fired Generation was a popular part of the Summit content at POWERGEN International last month in New Orleans. The coal-fired industry will remain part of the sessions offered when POWERGEN returns to Orlando December 8-10, 2020. The call for abstracts will be out soon.