Banks vs. the paris agreement

Who's still financing coal plant development?

introduction

"Coal is dead" was the verdict in June 2017 from a senior executive at BlackRock, the world’s largest investment group. The coal industry may indeed be in decline, due to a combination of factors including the plummeting cost of renewable energy, tighter regulatory regimes and grassroots opposition to coal plants worldwide, but it is still far from down and out.

According to data from the Global Coal Plant Tracker, while the number of new coal plants in the pre-construction phase around the world almost halved between 2015 and 2016, there are currently over 1,600 new coal plant units still in planning, predominantly in developing countries. If these were to be built, the world’s coal-fired power capacity would be expanded by more than 42%. To put this threat in context, the United Nations Environment Program recently recommended an end to the construction of new coal power plants and an accelerated phasing out of existing plants as key steps towards achieving the goals of the Paris Agreement.

This threat has been captured by the 'Global Coal Exit List‘, published in full by urgewald during the 2017 UN Climate Summit in Bonn. It provides for the first time the list of the top 120 coal plant developers, a group of companies which together plan to build more than 550,000 MW of new, climate-busting, coal-fired power capacity, the equivalent of the combined coal fleets of India, the United States and Germany. These are the companies which should be at the top of every divestment list – further investments in these companies are an entry ticket to a 4°C world and must be stopped now.

BankTrack, urgewald, Friends of the Earth France, Re:Common and Rainforest Action Network have dug into the investment numbers to discover which commercial banks are financing these companies. Our research shows that between January 2014 and September 2017, the global banking sector provided and mobilised financing in excess of $600 billion for the top 120 coal plant developers, via lending and underwriting. And approaching half of this sum – $275 billion – has been provided since the Paris Agreement was signed in 2015, despite their coal plant development plans being fundamentally incompatible with the agreement's objectives.

Major financing for coal power expansion is still materialising despite some notable progress in recent years from a number of big banks which have, in various ways, publicly committed to curb their financing for companies in the coal power sector. Yet, as revealed by this new dataset, banks are still a long way off from closing their doors to the 120 coal plant developers that pose the biggest threat to the climate.

On the occasion of the second anniversary of the Paris Agreement, world leaders convened alongside major financial institutions and business leaders for Climate Finance Day in Paris. With a ‘global stocktake’ under way now on the climate action taken since the signing of the Paris Agreement, there is an urgent need to take stock of the coal power disaster that banks are facilitating – a disaster which, for the most part, is continuing unabated. This analysis is published in tandem with the 'Investors vs. the Paris Agreement‘ report from urgewald which reveals the institutions still investing in the top 120 coal plant developers.

The coal plant developer companies and their financial supporters are hereby unveiled – who would now argue against the financial blacklisting of these coal companies which are threatening us all?

As COP22 enters its second week in Marrakech, we publish today our latest report with Rainforest Action Network Les Amis...

Geplaatst door BankTrack op maandag 14 november 2016

rankings

The graphs below present a breakdown of the commercial banks which have been the main financiers of the top 120 coal plant developers between January 2014 and September 2017. Lending figures cover the project finance and corporate finance disbursed to these companies, while underwriting figures cover the issuance of shares and bonds for the same companies.

The table below present a breakdown of the commercial banks which have been the main financiers of the top 120 coal plant developers between January 2014 and September 2017. Lending figures cover the project finance and corporate finance disbursed to these companies, while underwriting figures cover the issuance of shares and bonds for the same companies.

For a full description of the methodology used, you can read this explainer

view financing by:

Lending and underwriting
Lending
Underwriting

Top 20 Coal Plant Developers Banks

$10B
$10B
$20B
$20B
$30B
$30B
$40B
$40B
1.
ICBC
2.
China Construction Bank
3.
CITIC
4.
Bank of China
5.
Agricultural Bank of China
6.
China Merchants Bank
7.
China Everbright Bank
8.
Mizuho
9.
Bank of Communications
10.
Ping An Insurance
11.
MUFG
12.
HSBC
13.
Bank of Beijing
14.
Industrial Bank
15.
Shanghai Pudong Development Bank
16.
China Minsheng Bank
17.
State Bank of India
18.
Citi
19.
Nomura
20.
Shenwan Hongyuan Group
1.
Mizuho
2.
MUFG
3.
State Bank of India
4.
ICBC
5.
SMBC
6.
Bank of China
7.
ING Group
8.
Citi
9.
HSBC
10.
Société Générale
11.
China Construction Bank
12.
Standard Chartered
13.
Bank Rakyat Indonesia
14.
BNP Paribas
15.
Bank Negara Indonesia
16.
ICICI Bank
17.
Deutsche Bank
18.
Crédit Agricole
19.
Bank Mandiri
20.
ANZ
1.
ICBC
2.
China Construction Bank
3.
CITIC
4.
Agricultural Bank of China
5.
Bank of China
6.
China Merchants Bank
7.
China Everbright Bank
8.
Ping An Insurance
9.
Bank of Communications
10.
Bank of Beijing
11.
Industrial Bank
12.
Shanghai Pudong Development Bank
13.
China Minsheng Bank
14.
HSBC
15.
Citi
16.
Nomura
17.
Shenwan Hongyuan Group
18.
GF Securities
19.
Donghai Securities
20.
Beijing Capital Group
Loans
Underwriting
Financing in US dollars

rankings

The graphs below present a breakdown of the commercial banks which have been the main financiers of the top 120 coal plant developers between January 2014 and September 2017. Lending figures cover the project finance and corporate finance disbursed to these companies, while underwriting figures cover the issuance of shares and bonds for the same companies.

The table below present a breakdown of the commercial banks which have been the main financiers of the top 120 coal plant developers between January 2014 and September 2017. Lending figures cover the project finance and corporate finance disbursed to these companies, while underwriting figures cover the issuance of shares and bonds for the same companies.

For a full description of the methodology used, you can read this explainer

view financing by:

Top 20 Coal Plant Developers Banks, Lending and underwriting, in US dollars, millions, 2014-2017

Bank
total
1.
ICBC
$36,978
2.
China Construction Bank
$32,906
3.
CITIC
$28,088
4.
Bank of China
$27,200
5.
Agricultural Bank of China
$26,810
6.
China Merchants Bank
$23,738
7.
China Everbright Bank
$23,242
8.
Mizuho
$16,810
9.
Bank of Communications
$14,480
10.
Ping An Insurance
$14,310
11.
MUFG
$13,698
12.
HSBC
$13,008
13.
Bank of Beijing
$12,254
14.
Industrial Bank
$12,117
15.
Shanghai Pudong Development Bank
$12,092
16.
China Minsheng Bank
$11,642
17.
State Bank of India
$9,872
18.
Citi
$9,556
19.
Nomura
$6,757
20.
Shenwan Hongyuan Group
$6,751
Finance in US dollars, millions, 2014 - 2017

main findings

Context

The world’s top 120 coal plant developers were revealed by urgewald in June 2017 as part of the launch of the Global Coal Exit List. The list ranks India’s NTPC as number one, with 38,372 MW of new coal capacity planned in India and Bangladesh. Next in line are Chinese companies such as SPIC (31,587 MW), China Datang (28,945 MW), Shenhua (26,014 MW), China Huadian (25,810 MW), China Huaneng (20,750 MW) and China Guodian (17,250 MW).

The top 120 list includes the 56 companies in the world that plan to build more than 3000 MW of new coal capacity. Also included are companies planning new coal plant buildout in 'frontier' countries which currently have little or no coal-fired capacity, but which could become locked into a coal-dependent future for decades to come – countries such as Egypt, which plans to go from 0 to 17,240 MW of coal capacity, Pakistan, planning an 8041% increase in its coal capacity, and Bangladesh, planning a 6384% increase. KEPCO, the world’s 10th largest coal plant developer, aims to build 14,327 MW of new coal power capacity in South Korea and six other frontier Asian and African countries.

The list contains ‘pure play’ coal utilities, as well as very diversified companies. In the latter category is Japan’s Marubeni, the 26th largest coal plant developer worldwide, which is involved in joint ventures which could add 13,000 MW of new coal power capacity in nine countries. Collectively, these 120 companies are behind two thirds of current coal power expansion plans worldwide.

For a full description of the methodology used to select these top 120 coal plant developers, see this briefing from urgewald.


Underwriting is dwarfing lending

For the January 2014 to September 2017 period, 82% of financing for coal plant development companies was derived via underwriting (the issuance of new shares and bonds) and only 18% via lending. Driving this is the fact that Chinese coal companies source almost all of their financing from bond issues.

Of the total bank lending to coal plant developers, 27% is in the form of project finance loans (which thus comprises 5% of total financing), while 73% is general corporate finance (comprising 13% of total financing).

LENDING: PROJECT FINANCE
LENDING: CORPORATE FINANCE
UNDERWRITING

Asian – principally Chinese – banks are the big backers of the coal plant developers

Standing at 60% of the overall total of financing between January 2014 and September 2017, most of the financing to the top 120 coal plant developers came from Chinese banks, the vast majority of this through the issuance of bonds. Coming second, 8% of the total financing came from Japanese banks, this time mostly through lending to coal plant developers. Indian banks rank third, channelling 7% of the total financing.

Chinese coal companies are the major coal power expansionists – they are behind 45% of the projects currently proposed by the top 120 coal plant developers, and roughly 1/7 of these projects are located outside China. These companies also received the majority of bank financing, netting 66% of the total bank finance for coal developers between January 2014 and September 2017. Indian coal developers rank second, with 9% of the total financing coming their way. Japanese coal plant developers rank third, with 6% of the total financing.

Most of these Asian financial flows stayed within national borders, with banks from a specific country tending in the main to finance coal plant developers from the same country. However, it should be noted that given the international activities undertaken by many of these companies, this financing is fuelling coal expansion globally.

The map on the right shows where the bank finance for the 120 top coal plant developers originates, and where it is heading to, by country.

The table below shows where the bank finance for the 120 top coal plant developers originates, and where it is heading to, by country.


Origin of finance
Destination of finance
?
?

Share of financing to the top 120 coal plant developers, by country of origin of commercial banks

Share of financing by commercial banks to the top 120 coal plant developers, by country of companies’ headquarters