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Banking on Climate Change 2020 - Coal power. Photo: Rainforest Action Network (RAN)Go directly to: coal power policy table or coal power exclusion table
After crude oil, coal is currently the world’s second largest primary energy source. Coal is a carbon-rich black rock with a very high climate impact when combusted. Electricity produced from coal has the highest climate impact of all types of fossil fuels and opposition to coal power has steadily been growing due to its severe climate, environmental and health impacts. Furthermore, coal power is getting priced out of the market by renewables, which continue to plummet in price, as well as by gas. Coal power use is declining sharply in the OECD and Eastern European countries, although in Latin America, the Middle East and many Asian countries its use remains stable or on the rise.
When coal is burned, it releases a wide range of pollutants and toxins including lead, sulfur dioxide, nitrogen oxides, mercury and various heavy metals. This pollution is particularly severe in often poorer countries with weaker regulatory regimes. Health impacts for people downwind from coal power plants range from various types of cancer, respiratory diseases, brain damage and premature deaths. The ash left after burning coal often ends up in waste sites after which it can contaminate the local water supplies. The most severe long-term impact of burning coal is the release of carbon dioxide and other greenhouse gases that cause climate change.
The severity of the climate crisis requires that banks must urgently take steps to disengage from financing business activities and projects that continue the world's reliance on fossil fuels. Banks must therefore end support for all new coal power projects and implement a full phase-out for financing coal power projects, in line with the Paris climate agreement.
The world’s two biggest financiers of coal power are Chinese banks ICBC and Bank of China. Both have financed coal power to the tune of USD 21 billion since the Paris climate agreement (2016-2019). Two other major coal power financiers are China Construction Bank and Agricultural Bank of China, both having financed coal power by about USD 14 billion since the Paris climate agreement.
Many, but not all, European and US banks now have restrictions in place for financing coal power, while Canadian and especially Chinese banks often lack these kinds of policies. Bank policies on coal power are scored below. These scores were originally published in our Banking on Climate Change 2020 report, and any policy changes implemented since then have been assessed using the same methodology. The details section in the table contains further detail on the exact scoring per bank, as well as an overview of relevant policies.
See here for banks' exposure to the coal power sector in 2016-2019.
The point-based policy ranking assesses bank policies in four ways:
1) Restriction on direct financing for coal power projects.
2) Restriction on financing for companies that expand coal power.
3) The bank’s commitment to phase-out financing for coal power.
4) The bank’s commitment to exclude companies active in coal power above a certain threshold.
A bank can obtain a total of 32 policy points for its coal power policy. Based on this score banks are then classified as laggards (0-8 points), followers (8.5-16 points), front runners (16.5-24 points) or leaders (24.5-32 points).
A number of banks have already taken steps to fully or partially exclude coal power or companies involved in coal power operations from their investments. The table below lists banks that have taken such steps.
This table lists banks that have adopted a full ( ) or partial ( ) exclusion policy for coal power projects and/or companies. Click on 'Details' for the rationale of this assessment for each bank.
See the Coal Policy Tool from Reclaim Finance for a more in-depth analysis of coal policies from banks (and other financial institutions).
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 climate@banktrack.org.