In 2015, world leaders agreed to ensure finance reduced greenhouse gas emissions, but new data shows that HSBC, Standard Chartered, Barclays and Royal Bank of Scotland continued to support firms investing in coal.
The data shows that those four banks supported companies with plans to build new coal plants to the tune of $31.8 billion or £24.7 billion between 2016 and 2019.
Between them, these companies plan to build 174 gigawatts of new coal plants, equivalent to the total operating capacity of the EU and Australia put together. However, industry data is not yet sufficiently transparent to calculate how much of the money is used directly for coal plant construction.
The plans include the Adani megamine in Australia, a controversial new coal plant in Germany and huge coal expansion in Indonesia.
Over the period, HSBC was the biggest coal financer out of all UK banks, with its support worth £8.4 billion. This consisted of £2.1 billion of loans and £6.1 billion of underwriting.
Underwriting is what banks do when companies issue bonds on the public markets. An underwriting bank purchases bonds and then sells them on.
Despite positioning themselves as concerned about climate change Barclays and Standard Chartered actually increased the amount of support they provided in the last two years, compared to 2014-2016.
The figure for Barclays rose from £2.8 billion to £5.8 billion and the figure for Standard Chartered rose from £2.5 billion to £6.6 billion.
HSBC, meanwhile, has decreased its support for companies building new coal plants from £8.7 billion to £6.1 billion.
The state-owned Royal Bank of Scotland exited the global coal sector last year, providing no financing at all for companies building new coal plants from January to September.
In 2015 at the United Nations climate conference in Paris, leaders signed an agreement including a commitment to “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”.
The UK will next year host next year’s annual climate conference, billed as the most important since Paris because world leaders are meant to upgrade pledges made in 2015.
Greig Aitken, coal campaigner at BankTrack, told Unearthed: “One year out from the UK’s hosting of the UN Climate Summit, if Barclays, HSBC and Standard Chartered don’t act rapidly to rein in their financing of coal expansion companies, the UK government should take steps or risk turning up in Glasgow with coal dust on their faces thanks to our big fossil banks.
“Compared to their European counterparts, UK banks have stubbornly failed for several years to adequately respond to the worsening climate emergency by at least introducing policy restrictions to significantly curb their sponsoring of coal expansion around the world. Cosmetic policy tweaks no longer cut it.”
The data, which was gathered from financial databases at Bloomberg and Refinitiv and from company reporting, is part of a bigger report that Urgewald and BankTrack plan to publish on the financing of new coal plants globally. They shared the UK information with Unearthed in advance of the final report.
It is based on Urgewald’s list of 258 companies with known coal plant expansion plans, 51 of which received financial support from UK banks.
Between 2017 and 2019, the Finnish state-owned energy company Fortum received more funding from UK banks than any other company with coal expansion plans. It received £2.5 billion from Barclays, mainly in loans, and £1.7 billion in loans from Royal Bank of Scotland, which is itself state-owned.
Fortum recently agreed to take control of the German energy company Uniper in a 2.3 billion euro deal, meaning it will take over the company’s numerous coal plants.
According to Urgewald’s data, Fortum makes only 5% of its revenue from coal and only 3% of the power it produces is from coal. However, Uniper is involved in a controversial plan to build a new coal plant in Germany.
The plant, Datteln 4, is controversial because of the German government’s plan to abandon coal as an energy source by 2038. According to a report from Reuters, the 1.1 gigawatt plant will be allowed to enter service despite the government’s commission recommending that no new coal plants be brought into use.
A spokesperson for Fortum said: “We don’t invest in Uniper because of coal but despite coal. Our goal is to create a leader in Europe’s energy transition. The energy transition will require significant investments in the coming decades not only in renewables, but also in gas, energy storage, and other flexibility solutions to provide security of supply.”
A Uniper spokesperson said that Fortum’s finances were a matter for Fortum but added that the Datteln 4 project had not received any “bilateral loans” from UK banks.