‘Paris Pledge’ pushes for coal-industry retirement
After the hottest June ever recorded , and with the latest study from James Hansen, one of the world's most prominent climate scientists, warning that global sealevel rises linked to climate change are on course to make every coastal city on the planet uninhabitable within a few more decades, we're now just over 4 months away from the start of the United Nations climate summit in Paris – and the mood music is being cranked up, albeit in a rather flat key.
There is talk of ‘consensus’ being reached behind the scenes in ‘unofficial meetings’ involving key countries. According to Harald Dovland, a former Norwegian environment minister who has been chairing some of these meetings, ‘There will not be a Big Bang in Paris, but hopefully there will be a step in the right direction.’
The word being put about is that this ‘right direction’ will be an important step forward from the negotiating disaster that was the Copenhagen climate summit of 2009. This would be accurate to the extent that the world’s nations are eyeing a deal that would commit every country to restricting greenhouse gases but bind none to specific targets.
As the pre-Paris pow-wows mount, recognition of the limits to an ultimate Paris deal was also echoed earlier this month by Laurence Tubiana, France’s ambassador to the UN climate talks. ‘Paris will not solve everything, of course,’ she told a meeting of climate scientists, ‘but we have to have every actor believing … that a low-carbon resilient economy is the future.’ The same meeting also heard tougher talk from Hans Joachim Schellnhuber, director of the Potsdam Institute for Climate Impact Research, who identified the pressing need for the ‘induced implosion of the carbon economy’ if we are to have any hope of ‘avoiding dangerous, maybe disastrous climate change’.
How, then, to shake up the pragmatic – many would say unambitious – ‘consensus’ narrative now emerging at the highest negotiating levels, and induce this implosion of the carbon economy? Even the Organisation for Economic Co-operation and Development (OECD) has become so alarmed about the consequences of inaction that they are starting to sound like climate activists. Stressing the carbon lock-in – for decades – that coal power plants involve, OECD secretary general Ángel Gurría has also recently pitched in with his own pre-Paris, pro-climate drumbeats, urging governments around the world to think ‘twice, or three, or four times’ before allowing new coal plants to go ahead.
This is further proof that decreasing and ultimately ending our reliance on fossil fuels has now become a mainstream view – uncontroversial and widely accepted across the board, except of course in the boardrooms of fossil-fuel companies. And practical steps to achieve this have been gaining major momentum, seen most vividly by the growing reach and real impacts of the fossil-fuel divestment campaign.
In June the movement won its biggest victory yet when Norway’s state pension fund – the largest sovereign wealth fund in the world – agreed to divest from coal. Even the likes of Forbes magazine have begun to recognize coal divestment as ‘the obvious – and increasingly popular – choice’.
One vital form of financial life support for the coal industry, ripe for divestment campaigning and achievable practical action, is the global banking sector’s multi-billion-dollar coal finance. BankTrack’s research has found $500 billion in coal finance channelled between 2005 and April 2014 from the world’s biggest banks to the coal industry. This is likely to be a significant underestimate, and most worryingly, the amount of finance the banks are providing has been going up.
Is coal, however, still providing a good deal for the private banks? It can’t have escaped the attention of anyone following global energy trends that the coal industry is in crisis and haemorrhaging money with, for example, China – the world’s biggest consumer of coal – serving notice in a barrage of announcements and real-time statistics that it wants to and is already starting to phase out coal – Chinese coal consumption already fell in 2014 and is continuing to do so in 2015.
A further big hint on how banks are now thinking about coal emerged from investment analysts at British bank HSBC in April this year. Serving notice that fossil-fuel companies may become ‘economically non-viable’ in view of the emerging reality of stranded fossil-fuel assets, the analysts laid out 3 options for investors: ‘divesting completely from fossil fuels; shedding the highest risk investments such as coal and oil; or staying the course and engaging with fossil-fuel companies as an investor.’ At the beginning of the year, too, an investor note from Goldman Sachs appeared to reflect deepening sentiment within the banking sector by referring to coal as having reached ‘retirement age’ – a quaint way of saying that the time has come to stop investing in a dying industry.
Yet have HSBC and Goldman Sachs matched their investor advice by calling an end to their own multi-billion-dollar coal investments? Far from it.
And that’s why BankTrack has launched a new international public campaign in the run-up to the Paris climate summit in November. We’re urging the world’s banks to ‘do the Paris Pledge’ and publicly commit to a phase-out of their financing for the coal industry. Via the campaign website, the public can instead insist on a much better deal for public health, the environment and the climate by pressuring banks to end their financial life support for coal.
A couple of the banks in question have given us additional encouragement of late. This year Bank of America and Crédit Agricole became the first two big global banks to announce that they are ending their investments for coalmining projects and companies. Furthermore, the recent assessment of the proposed Carmichael coalmine in Australia, a ‘carbon bomb’ project led by Indian coal giant Adani that could lead to the devastation of the Great Barrier Reef and drastically escalate climate change, as being ‘unbankable’ in the view of Queensland's Treasury, again underscores the fragility of the coal industry and points to its now firmly rooted ‘bad investment’ status.
Meanwhile, another bank, BNP Paribas, the top French banker of the coal sector by a long way, has provoked widespread incredulity and criticism by becoming one of the corporate sponsors of the Paris summit.
A combination of cautious optimism about what is beginning to transpire in the banking sector’s approach to coal, mixed with indignation about the scale of financial support for coal by banks that are directly and indirectly looking to influence the Paris summit, can make the Paris Pledge campaign have real impact. Why not lend your voice, and help stop the banks lending more of your money to coal.
You can support the Paris Pledge and call on the world’s banks to end their financing for the coal industry at: dotheparispledge.org
Catalina von Hildebrand is the Paris Pledge Campaign Coordinator at BankTrack.
The November 2015 issue of New Internationalist focuses on the COP21 Paris talks and aims to provide readers the information and analysis they need to engage with global climate politics, before, during and after this event.