So, big news on Wall Street today regarding coal and our climate. Three of the largest investment banks (Citigroup, Morgan Stanley, and JP Morgan Chase) announced the formation of the “Carbon Principles” - a set of guidelines the banks will follow when lending money to carbon-intensive projects, such as coal-fired power plants.
While the banks don’t go so far as to say they WON’T finance coal-fired power plants - if I were the CEO of a utility or coal company - I’d be worried. Here’s my analysis of these principles:
WHAT’S GOOD:
- Banks are REALLY keen on not having any accountability for their investments -legally, or for their brand image. They want to pretend an economy is only numbers and to be accountable only for the math and profits - not for the real-world, on-the-ground impacts their participation in the economy has. Banks are happy to address the carbon footprint of their internal operations (pushing papers around is relatively benign, atmospherically-speaking) - but if their footprint includes their “financed emissions” - they start to look bad. REALLY bad. The fact that banks are even talking about the impacts of their investments, and that they have a responsibility they have towards socially and ecologically responsible lending practices is a good first step. Banks weren’t even really talking about coal or their financed emissions a year ago.
- The banks pledge “Enhanced Diligence” in evaluating the carbon risks of coal-fired power plants, which includes the potential liability for future carbon regulation, requirements for carbon storage and sequestration, and to prioritize zero/low carbon projects. Again - the banks aren’t saying straight-up they won’t fund coal - but they at least appear to putting up a few hurdles for carbon-intensive projects to gain financing. I can’t see how they would be able to fund a coal-fired power plant if they are actually honestly abiding by these principles.
- Utility companies were rumored to have involved in drafting these principles initially - but in the end they were not signatories to the principles, they are merely listed as being “consulted”. Did they get
coalcold feet in the process of drafting this document? Does this mean that the utilities see serious intent from the banks’ to put a damper on coal? That remains to be seen - but it’s a good sign.
WHAT’S LACKING:
- These principles don’t have any sort of binding commitments to reduce their financed emissions. While guidelines are nice - there simply needs to be a complete moratorium on coal-fired power plants and other carbon-intensive industries. This is the crucial step for our climate - and banks should have an outright moratorium on financing new coal development - not merely guidelines.
- These principles only partially address the problems of coal - they still ignore incredibly destructive extraction methods such as mountaintop removal mining.
- Environmental Defense and NRDC are not listed as signatories either - does this mean even they see this document as not being substantive enough to fully endorse? That too, remains to be seen.
- Bank of America is noticeably absent from the principles. As a leading financier to some of the dirtiest coal developments in the country - where are they in this process?
- Despite big past commitments to “green banking” - Wall Street still pours money to King Coal hand over fist. Banks need to be much more transparent about where their investments are going - all the major Wall Street banks finance hundreds of times more money to dirty energy than to clean energy. I hope the tides are changing - but so far they haven’t walked their own talk.
You can see the banks’ press release here, and Rainforest Action Network’s official response here.
For the past year, a huge coalition of groups has been campaigning on Wall Street Banks’ to end their financing of the dirty coal industry. Groups such Rainforest Action Network, Energy Action Coalition, Rising Tide North America, Coal River Mountain Watch, and many more have been leading the campaign - holding hundreds of public demonstrations, filing shareholder resolutions, and taken non-violent direct action to demand that banks stop banking on the destruction of our climate.
Our strategy of campaigning against the financing of coal is two-fold. First - we are demanding that banks (where many of us hold our checking accounts, credit cards, mortgages, or student loans) should not be profiting from, nor accelerating the destruction of our climate, environment, and communities. We are taking the money out from under carbon-intensive industries like coal and tar sands - rather than fighting one destructive project at a time.
But just as importantly - we are demanding a future where our economy is in sync with our ecology - where investments are made in clean energy, sustainable development, and justice for our communities. As we are seeing now with a looming recession, the credit crisis, and mortgage meltdowns across the country - our current economy is destroying the social and ecological fabrics of our society. People are demanding a new world - based on clean energy, ecological principles, social justice, and an economy that works for people, not profit.
-Matt
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Nice analysis Matt.
By the way, on this point: “The banks pledge “Enhanced Diligence” in evaluating the carbon risks of coal-fired power plants, which includes the potential liability for future carbon regulation, requirements for carbon storage and sequestration, and to prioritize zero/low carbon projects. Again - the banks aren’t saying straight-up they won’t fund coal - but they at least appear to putting up a few hurdles for carbon-intensive projects to gain financing. I can’t see how they would be able to fund a coal-fired power plant if they are actually honestly abiding by these principles.”
This is exactly the tact we’ve used (successfully) here in the Northwest (OR and WA) to keep all the regulated utilities in the region away from coal (and I do mean all of them now that PacifiCorp has dropped their plans for 850-1700 MW of new coal!): forcing utilities and regulators to take into account the financial risk of future carbon regulation in their resource decisions.
In my day job at Renewable Northwest Project, I and my allies in other sane organizations have been pushing the utility regulators in our states - particularly Oregon where we have the best hold over coal-heavy, 6-state utility behemoth PacifiCorp - to take a much more serious and rigorous look at the financial risks of future carbon regulation. When utilities see carbon regulation - and it’s moved from a matter of if to a matter of when and how much - they will see a much higher cost to run and operate coal plants (that’s the whole point of the regulation of course), and since so much of utility resource decision-making is supposed to be long-term “prudent” planning, we essentially get to ask utilities and regulators to plan to comply with future carbon regulation even before it is enacted.
The end result: coal suddenly seems like a much less safe (financially) and cheap option, and now not a single Northwest utility is considering a new coal-plant now (at least an unsequestered one… PacifiCorp may still consider an IGCC plant with sequestration for the end of the next decade, but we’ll see). PacifiCorp, already 70% reliant on coal, had planned to build up to 1700 MW of new coal plants over the next 15 years, but relentless opposition on all fronts at the regulatory process blocked these plans, and PacifiCorp has now decided that coal is not a good proposition “at this point.” That buys us some critical time, and if we do our jobs right, “at this point” becomes “forever” pretty soon…
If banks start putting the same pressure as Oregon regulators on utilities to factor in the costs of future carbon regulation, that’ll go a long way towards cooling the already faltering coal rush. Nice work RAN and everyone else who’s been fighting the coal rush!
The Bankers Are Mad — http://alternet.org/story/75858/. Can we speak with the insane?
Also, what could banks invest in that would be considered “sustainable”? Making money requires production. Production requires materials. Materials requires mining, deforesting, and the destruction of soils. Are any of those things sustainable?
Evan,
I don’t think you can quite simplify “sustainable” in that way. I’ll be first to challenge so-called “green capitalism”, or even “Green consumerism” - but an economy is far more complex than that.
Materials do require mining, deforesting, and at least the usage of soils. These things are not inherently unsustainable - you can use (some) natural resources in ways that are sustainable, or that at least promote and move towards sustainability.
But you are right - our current economy demands infinite growth and externalizes virtually all impacts that are not quantifiable solely or easily in money. But an economy does not need to operate this way - and in fact, by it’s own internal logic - cannot operate this way in perpetuity. At some point (sooner than later, as we are seeing) the traditionally externalized impacts of our economy are catching up to us. This is peak oil. This is climate change. Industrial deforestation. Topsoil loss. Poverty. Resource Scarcity - ad naseum.
This moment we are in - where finite resources are confronting the demand for infinite growth - gives us (as visionaries, as youth, as people simply demanding a livable plant) a chance to expose this conflict for what it is. Climate change is not simply a problem of pollution. Mountaintop Removal mining is not simply a problem of coal. Drilling in Alaska is not a problem of oil. Poverty is not a problem of not having a job. They are problems of an economy that is unsustainable - and to adequately confront these problems means we must confront our economy - and remake the very nature of our social, ecological, political, and economic relationships.
-Matt
Matt,
What I intend to suggest more than anything is that a highly industrial capitalistic society — this one — will not change because we ask the bankers and politicians nicely. Are any of the presidential candidates talking about Energy Descent and what that actually means? No, because no one will elect them. Are bankers and corporate CEOs going to change their practices unless it can make them money — of course not.
You’re absolutely right that MTR and ANWR drilling are not just problems of energy sources, but to remake all those things requires more than petitioning congress and bankers, doesn’t it?
Evan