New Report Speculates on the End of Coal

onMay 4, 2015 @ 13:17 PDT

A new coal report out today finds that despite growing risk, major banks continue to pump billions into the global coal industry. However, there are growing signs that coal is falling out of grace with major lenders.

The report, The End of Coal [pdf] was published by the Rainforest Action Network, BankTrack and the Sierra Club. The groups found that, in 2014, global banks financed close to $70 billion in coal mining operations. — up from $55 billion the previous year.

However, the report also finds that coal is starting to lose out, with a critical mass of banks in 2014 refusing to finance environmentally destructive coal projects like the proposed mine in Australia’s Galilee Basin. In the case of the Galilee Basin eleven major international lenders have stated they would not finance the project, including the major French investment banks BNP Paribas, Credit Agricole and Societe General.

The five largest lenders to the global coal mining sector in 2014 were all China-based:

Industrial Bank (China)
Bank of China
China Everbright Bank
China Construction Bank
Agriculture Bank of China

These 5 companies alone underwrote $26.5 billion worth of coal mining projects.

This pace of investment will likely soften over the coming years as China’s consumption of coal begins to flatline and governments continue to impose new pollution regulations on the sector and a price on carbon gains more support.

Earlier this year, China Shenhua Energy Co., one of China’s largest coal companies, projected commercial coal production to fall over 10% in 2015. This follows on a 2.5% reduction in coal production in China for 2014.

In the United States, major coal companies like St. Louis-based Peabody Energy have seen their stock price crash over the last few years.

Peabody (NYSE: BTU), which was trading as high as $72 per share in mid-2011 is trading today at less than $5.

Other major US coal companies are also feeling the pinch, like Alpha Natural Resources (NYSE: ANR) and Arch Coal (NYSE: ACI). Both are currenly trading below $1 per share.

By Kevin Grandia

Kevin is a contributor and strategic adviser to DeSmog. He runs the digital marketing agency Spake Media House. Named a “Green Hero” by Rolling Stone Magazine and one of the “Top 50 Tweeters” on climate change and environment issues, Kevin has appeared in major news media outlets around the world for his work on digital campaigning. Kevin has been involved in the public policy arena in both the United States and Canada for more than a decade. For five years he was the managing editor of DeSmogBlog.com. In this role, Kevin’s research into the “climate denial industry” and the right-wing think tank networks was featured in news media articles around the world. He is most well known for his ground-breaking research into David and Charles Koch’s massive financial investments in the Republican and tea party networks. Kevin is the first person to be designated a “Certified Expert” on the political and community organizing platform NationBuilder. Prior to DeSmog, Kevin worked in various political and government roles. He was Senior Advisor to the Minister of State for Multiculturalism and a Special Assistant to the Minister of State for Asia Pacific, Foreign Affairs for the Government of Canada. Kevin also worked in various roles in the British Columbia provincial government in the Office of the Premier and the Ministry of Health. In 2008 Kevin co-founded a groundbreaking new online election tool called Vote for Environment which was later nominated for a World Summit Award in recognition of the world’s best e-Content and innovative ICT applications. Kevin moved to Washington, DC in 2010 where he worked for two years as the Director of Online Strategy for Greenpeace USA and has since returned to his hometown of Vancouver, Canada.