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New Coal Finance Report Card Exposes Risk of Extreme Energy Investments

Banks pump $20 billion into coal despite U.S. coal industry decline and escalating climate impacts
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By Rainforest Action Network | San Francisco, Apr 29 2013

Today, Rainforest Action Network (RAN), Sierra Club and BankTrack released the fourth annual coal finance report card,"Extreme Investments: U.S Banks and the Coal Industry." The report finds that in 2012 the banking sector financed $20.8 billion for the dirtiest coal companies, even as U.S. coal consumption for power generation fell 11 percent and as mounting scientific evidence confirmed coal's extreme impact on health and climate change. It ranks Bank of America, Citigroup and JPMorgan Chase as the top three financiers of the "worst of the worst" coal companies, including operators of coal-fired power plants and mountaintop removal (MTR) coal mines.

The report also found that the top three U.S. financiers of the coal industry (BofA, Citi, & Chase) collectively financed an estimated $9 billion for mountaintop removal mining companies and the most coal-intensive power utilities last year. The report details how financial practices failed to address risks and impacts of an industry in decline and underscores the need for banks to take steps to reduce exposure to coal.

"The bottom line is any bank funding coal puts our health and the climate at risk," said Ben Collins, research and policy campaigner for Rainforest Action Network's Energy and Finance program. "The acute environmental and financial risks of coal have already begun to materialize. For the health of our communities and the sake of our future energy supply, banks must take clear, measurable steps to address the impacts of their coal financing."

The report includes case studies on the most risk coal investments banks are exposed to, including Patriot Coal, which declared bankruptcy in 2012 and began to phase out its MTR mining operations, and the Tennessee Valley Authority, which recently announced controversial plans to extend the life of a coal plant.

"Mountaintop removal coal mining brings destruction, health problems and human rights violations to the people of Appalachia," said Mark Kresowik,a policy analyst for the Beyond Coal Campaign at the Sierra Club. "Operations like those at Arch Coal and Alpha Natural Resources are awful investments for the American banking industry. In fact, shares of companies with MTR mines lost an average of 40% of their value between April 2012 and April 2013 and only one of the 13 largest MTR companies had an S&P credit rating above ‘junk.' It's time for our banks to invest in smart, clean alternatives that don't risk our health or the health of our economy."

The report points out that while many of the banks have adopted environmental policies and due diligence processes, these have had little measurable impact on financing provided to the most polluting coal companies. One notable exception was Wells Fargo bank, which demonstrated substantive improvements in its mountaintop removal lending practices in 2012, resulting in a "C" grade.

Of the banks graded for 2013, BNY Mellon received the lowest grades, failing in both categories of exposure to mountaintop removal mining and coal fired power plants. Goldman Sachs and US Bank received two "D's" and PNC Financial failed for its coal power financing. Bank of America and Citi tied for most exposure to mountaintop removal, financing companies that mined 42 percent of all MTR coal produced in 2012.

The report finds that the environmental, social and financial risks involved with the entire lifecycle of coal from mining, to production to export are likely to grow even more acute over time. It urges banks to shift financing toward clean energy and plan for a carbon constrained future. Specific recommendations include phasing out lending to the largest producers of mountaintop removal coal, ensuring that coal financing deals commit banks and companies to emissions reductions and withholding financing for new coal export terminals.

The full report can be found online at: http://ran.org/coal-finance-reportcard-2013

###

Rainforest Action Network runs hard-hitting campaigns to break North America's fossil fuels addiction, protect endangered forests and Indigenous rights, and stop destructive investments around the world through education, grassroots organizing, and non-violent direct action. For more information, please visit: www.ran.org

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For media enquiries, please contact: 

Kerl Dyer, Energy & Finance Communications Manager, Rainforest Action Network

t: 001 415 659 0535

 

Rainforest Action Network Website

Bank of America
Bank of America is an American multinational banking and financial services corporation and is the second largest bank holding company in the United States by assets, and…
Citi
Citigroup Inc., doing business as Citi, is a major American financial services company based in New York, NY. Citigroup was formed from a merger between Citicorp and financial…
Goldman Sachs
Goldman Sachs (NYSE: GS) was founded in 1869 and is a leading global financial services firm that is headquartered in New York. It provides an array of financing…
JPMorgan Chase
JPMorgan Chase is one of the Big Four Banks of the United States (along with Bank of America, Citigroup and Wells Fargo). The firm was formed in…
Morgan Stanley
Morgan Stanley was one of the four investment banks that for decades ruled on Wall Street (with Lehman Brothers, Merril Lynch and JPMorgan Chase). The corporation, founded…
PNC
PNC Bank NA. is the principal subsidiary of the PNC Financial Services Group, Inc. Based in Pittsburgh, Pennsylvania. PNC operations include a regional banking franchise…
Wells Fargo
Wells Fargo is one of the big banks in the United States, located in San Fransisco. In october 2008, Wells Fargo acquired the troubled bank Wachovia, at that moment the sixth…
Mountain top removal coal mining
United States
Mountain top removal (MTR) mining is a form of strip mining in which coal companies use explosives to blast as much as 800 to 1,000 feet off the tops of mountains order to…
Alpha Natural Resources
United States
Alpha Natural Resources is a large American producer of metallurgical and thermal coal. It also provides services relating to equipment repairs, road construction and logistics…
Arch Coal
United States
Arch Coal is an American coal mining and processing company. The company mines, processes, and markets bituminous and sub-bituminous coal with low sulfur content in the United…
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