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Banks and coal
From concerns over air pollution and acid rain to its destructive impact on the climate, coal has long been recognised as the dirtiest, most polluting fossil fuel and historically the leading cause of climate change. Globally, the biggest source of carbon dioxide is burning of coal - greater than burning oil or gas, or carbon dioxide emissions caused by deforestation.
These facts have been well established for some time, which has led to coal being the most heavily opposed of all fossil fuels, whether by Indigenous populations, civil society organisations, the general public or the scientific community. Due to this opposition, worldwide emissions from burning coal have been leveling off over the last decade, while emissions from oil and gas continued to rise. However, the trend in emissions from burning coal shows a clear geographical distribution: coal is on the decline in the OECD and EU countries, while it's still on the rise in many parts of Africa, Asia and South America. At the same time, coal mining operations and coal power plants are facing more and more financial difficulties due to the plunging cost of renewable energy and cheap natural gas.
Coal's fast decline
In some parts of the world, like the US and EU, coal has already started its inevitable decline. However, the pace at which coal is declining is nowhere near the pace of decline which is required to stay within the 1.5 degrees target of the Paris Climate Agreement. In order to meet the 1.5 degrees goal, global carbon dioxide emissions must be more than halved from 2010 levels by 2030 and reach ‘net zero’ by 2050. This gives a 50% chance of staying below a 1.5 degrees temperature increase by 2100.
However, coal emissions need to fall about twice as fast as those for oil and gas in the 2020s, which means that global coal emissions should decline by about 80% from 14.5 gigatons CO2 in 2019, to 3.1 gigatons CO2 in 2030. Most developed regions in the world, like the EU, OECD countries and Russia, therefore need to exit coal at the latest by 2030, with the rest of the world following by 2040 at the latest. This means that no new coal mining, coal power or coal infrastructure can be built, and a significant part of the coal industry needs to close before the end of its planned operational lifetime.
Therefore, financing of new coal projects and the companies behind them is incompatible with the temperature goals set in the Paris Climate Agreement. Banks must end support for all new coal activities and implement a full phase-out for financing coal projects and companies in line with the 2030-2040 deadline.
Despite an increase in the number of banks that have restricted or ended their financing for the coal sector, too many banks continue to finance the dirtiest of fossil fuels, making it increasingly hard to avoid climate breakdown. Fifty of the biggest banks in the world have financed coal mining and coal power to the tune of USD 381 billion since the Paris Climate Agreement (2016-2021). The three biggest coal financiers in the world since 2016 are Bank of China (USD 38.47 billion), ICBC (USD 34 billion) and China CITIC Bank (USD 33.95 billion).
See here for banks' exposure to fossil fuel expanders in 2016-2021.
At the bottom of this page you can find the campaign pages of up-to-date assessments of bank policies in the Banking on Climate Change report on coal mining, coal power and coal infrastructure.
Bank policy scores on coal (overall score)
The table below shows banks’ aggregate policy score on coal. The 'details' section in the table provides further detail on the exact scoring per bank for coal mining, coal power, and coal infrastructure.
Bank policy scores on coal financing
Total: 30 points out of 80
13 points out of 32 for coal mining policy: see here.
17 points out of 32 for coal power policy: see here.
Total: 6.5 points out of 80
1 point out of 32 for coal mining policy: see here.
5.5 points out of 32 for coal power policy: see here.
Total: 44 points out of 80
22 points out of 32 for coal mining policy: see here.
22 points out of 32 for coal power policy: see here.
Total: 15 points out of 80
6.5 points out of 32 for coal mining policy: see here.
8.5 points out of 32 for coal power policy: see here.
For both coal mining and coal power, 32 possible policy points can be obtained, while for other coal,16 possible policy points can be obtained. So a bank can obtain a total of 80 policy points for its coal policies. Based on this score banks are then classified as laggards, followers, front runners or leaders.
Coal Policy Tool
Our work partners at Reclaim Finance have developed this Coal Policy Tool to analyse the quality of coal policies of banks and other financial institutions, providing further detail on strengths and weaknesses of specific policies.
Our policy assessments are always a work in progress and we very much welcome any feedback, especially from banks included in them. You can of course also contact us for more information on specific scores and the latest policy changes. Please get in touch at firstname.lastname@example.org.
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