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When it Comes to Coal, Climate Action Delayed is Climate Action Denied

By Mary Riddle
coal

Last week, the German nonprofit Urgewald and 40 partner NGOs released the 2022 Global Coal Exit List (GCEL), which includes data on thousands of energy companies and their subsidiaries. The 2022 update shows that although the International Energy Agency (IEA) has recognized that no new coal mines or plants can be developed after 2021 in order to meet the Paris Agreement’s goal of limiting global warming to 1.5 degrees Celsius, almost 500 companies are developing new coal plants today. Coal is the world's highest-polluting fossil fuel, responsible for approximately a third of the planet’s total emissions.

Despite promises, coal production is surging

There are approximately 6,500 coal plants in the world, and humanity’s success in limiting global warming to 1.5 degrees Celsius this century will depend on how quickly this fuel can be phased out. However, energy companies are delaying phase-out plans. According to Urgewald, in order to meet the 1.5 degree Celsius goal, the U.S. will need to phase out 30 gigawatts worth of coal-fired energy capacity each year between now and 2030. Last year, the U.S. only phased out 8.4 GW. While some energy companies have announced phase-out plans, many of them plan to retire this source of power outside of the timeline necessary to limit warming to 1.5 degrees Celsius. Only five of the 1,064 companies listed in the GCEL have a phase-out plan that aligns with the Paris Agreement.

China and India are the world's two largest coal producers, and Coal India, the world’s largest mine developer, has a stated goal to double its production by 2025. Heffa Schuecking, director of Urgewald, said: “Pursuing new coal projects in the midst of a climate emergency is reckless, irresponsible behavior. Investors, banks, and insurers should ban these coal developers from their portfolios immediately.”

Investments in fossil fuels haven't stopped 

The coal industry received more than $1.5 trillion in financing from 2019 to 2021, with 12 banks providing 39 percent of the global sector's underwriting. Eleven of the 12 underwriting banks are Chinese, and one is American: JPMorgan Chase. In fact, JPMorgan Chase, a member of the Net Zero Banking Alliance, is the world's seventh-largest coal industry lender, according to Urgewald's data. The only U.S. bank to lend more to the industry is Citigroup, which is also a member of the Net Zero Banking Alliance, a U.N.-convened group of banking companies that have pledged to align their portfolios with net zero.

“Many financial institutions justify their continued investments in the coal industry by claiming that they want to help these companies transition," Schuecking noted. "Our data, however, shows that the vast majority of companies with thermal coal related business are not transitioning. They are either developing new coal projects or dragging out the life of existing coal assets. Delaying has become a new form of climate denial.” Twelve banks issue almost half of the loans to this global industry. 

A 2018 report from the Intergovernmental Panel on Climate Change (IPCC) found that coal-fired power needs to be reduced 78 percent by 2030 in order to limit global warming to 1.5 degrees Celsius above pre-industrial levels. However, 2021 saw an unusual jump in coal use of more than 8 percent, and emissions from the energy sector rose 7 percent as a result. The increase in this source of fuel was the result of an increase in electricity demand, a decrease in hydropower availability due to drought and high natural gas prices.

A shift has occurred in the U.S. as well

Though U.S. coal-fired power generation had been decreasing since 2017, the country saw a 14 percent jump in coal power in 2021. Half of the countries that pledged to phase out coal use at the U.N. COP26 climate talks in 2021 recorded an increase in such power generation last year, too. Some analysts are expecting another power spike in 2022 as Europe grapples with unprecedentedly high natural gas prices. 

“Coal companies’ failure to transition mirrors the finance industry’s failure to adopt rigorous coal phase-out policies," said Lucie Pinson, director of Reclaim Finance, an NGO and think tank that monitors energy policy. "The majority of these companies won’t transition unless banks, investors, and insurers rapidly stop all support for the industry’s expansion and require the adoption of closure plans.” 

Of the top 500 financial institutions worldwide, 190 lack any kind of coal policy, while 300 of such fossil fuel policies are considered weak or inefficient. The continued lending of capital to these energy producers is bearing this result: Coal was responsible for 35 percent of global power generation in 2021, more than any other power source.

Image credit: Albert Hyseni via Unsplash

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Mary Riddle is a writer and sustainability consultant based in Florence, Italy. As a former farmer and farm educator, she is passionate about regenerative agriculture and sustainable food systems. Currently, she and her husband also own and operate Italy in Season, a subscription box company with a mission to support small-scale Italian artisans and traditional craftsmanship. 

Read more stories by Mary Riddle