Polluting and profitable, tremendously profitable. Humanity has been aware for years of how much is at stake in controlling its CO2 emissions and alleviating its considerable dependence on fuels with the greatest environmental impact; the problem is that, today, they continue to be a lucrative business that moves Thousands million euros every year and on a global scale.
A report prepared by Urgewald and Reclaim Finance together with an extensive list of NGOs shows how in less than three years – between January 2019 and November 2021 – commercial banks channeled around 1.5 billion dollars linked to the coal industry , the most carbon-intensive fossil fuel and directly linked to climate change. What’s more, the study reflects the fundamental role that a handful of financial institutions play in the sector.
a million dollar business
The authors of the analysis conclude that the banks of half a dozen countries – China, the United States, Japan, India, the United Kingdom and Canada – agglutinated 86% of the financing linked to coal at the international level. Specifically, and according to the figures broken down by Bloomberg, between loans and insurance, the entities of the Asian giant reached 748,700 million dollars, those of the US 207,500 and the Japanese 177,300. India, the United Kingdom and Canada added 176.6 billion.
For Heffa Schuecking, from Urgewald, the data only marks “the tip of the iceberg”although they serve, in his opinion, to verify how, beyond public promises and commitments, companies are not facing the change towards a model less dependent on fossil fuels.
“Banks like to argue that they want to help their coal customers make the transition, but the reality is that almost none of these companies are doing it,” said Katrin Gandswindt, head of research at Urgewald, before elaborating on the important role played by the flow of credit in transforming the current model: “They have no incentive to change if the financial industry continues to support them with blank checks.
Proof of how concentrated the contribution of funds is in the sector is that —according to the calculations made by Urgewald and the rest of the NGOs— although there were 376 commercial banks that injected, together, 363,000 million dollars in loans to the industry, a dozen brought together 48% of the sums received by the companies included in the Global Coal Exit List (GCEL), the list drawn up by Urgewald with the 1,032 companies that account for 90% of world production.
Among the largest lenders are — details the CBNC — large banks, such as Mizuho Financial, Mitsubishi UFJ Financial, SMBC Group and Barclays and Citigroup.
The report highlights the importance of subscriptions, bonds and shares issued for the purpose of attracting investors and injecting financing into companies. Through this channel, 484 banks managed to channel more than 1.2 trillion dollars. The business, in this case, is equally concentrated, with 39% of the operations processed by just twelve entities. As for names, Blackrock and Vanguard stand out. The data leaves, yes, a positive reading: a drop in financing in 2020 and 2021, although experts doubt whether it is the beginning of a trend or effect of COVID.
Although coal plays a key role in the energy sector, in which it represents —according to data from the International Energy Agency (IEA)— almost 40% of electricity generation on a global scale, its environmental footprint is equally devastating: is responsible for 46% of carbon emissions. The calculations of the technicians of the IEA itself conclude that governments must drastically reduce the weight of carbon in the world’s energy supply.
For the group it is clear that the weight loss of fossil fuels, including a reduction in carbon dioxide emissions by 45% by 2030, is crucial if the goal agreed in the Paris Agreement is to be achieved and global warming is to be limited. at 1.5ºC with respect to pre-industrial levels. The challenge is not easy. The economic recovery after the worst moments of the pandemic caused 2021 to see a rebound in coal-based power generation. Specifically, the IEA estimated in December that it would grow around 9%, which complicates the global objective of reaching the goal of net zero emissions by mid-century.
Cover Image | Daniel Moqvist (Unsplash) and Loco Steve (Flickr)