The Bank of England recently issued a stark warning to the financial sector: companies need to align their investments with climate action or face the possibility of $20 trillion worth of assets being wiped out. Particularly at threat was sectors like coal power, which could rapidly become worthless stranded assets as renewable energy costs continue to plummet and the world acts more seriously on climate change.
In light of the Bank of England’s warning, it might seem like good news that Standard Bank just issued a statement on how they plan to restrict their coal financing. After all, Standard Bank’s policy makes it such that they won’t be funding South Africa’s proposed Thabametsi and Khanyisa coal power plants because the plants would use heavily polluting coal technologies. That’s a step better than the Development Bank of Southern Africa, who are yet to even rule out these dirty technologies.
However, while Standard Bank’s new policy is a small step in the right direction, it falls far short of what’s needed. It still allows for funding for coal power, flying in the face of global trends away from coal and the urgent need to decarbonize the global energy sector if we are to avoid the worst impacts of catastrophic climate change.
Major global banks, like the World Bank, and local banks, like Nedbank, have committed not to finance new coal power plants. Meanwhile, Standard Bank’s new polluting policy still allows for the funding of what they call “higher efficiency, lower-emission coal-fired power plants, and capture and storage technologies”. Essentially, Standard Bank is pulling a Donald Trump and touting the myth of clean coal. And it is indeed a myth – a dangerous and polluting myth.
So called “higher efficiency, lower emission coal-fired power stations” are only lower emission relative to more heavily polluting coal plants. However, relative to renewable energy and what is needed to actually avoid climate catastrophe, even lower emission coal-fired power stations are still incredibly dirty – both in terms of its carbon emissions and its broader air and water pollution.
The latest IPCC report, from the world’s foremost scientists, tells us that globally we need to reduce carbon pollution by 45% by 2030 relative to 2010 levels. Adding new coal power plants when renewable energy is more affordable & readily available, only serves to increase emissions relative to clean energy. Lower emission coal power is thus still high carbon emission power relatively speaking.
It seems that Standard Bank may well recognize that their willingness to fund coal power simply does not stack up to what’s needed on climate action. They are asking their shareholders to vote against a resolution which would require them to incorporate climate risk into its lending, financing and investment activities. It’s a short-sighted, reckless position for them to refuse to even monitor the major risks that climate change and climate action poses to their business.
As for carbon capture and storage or CCS, any serious look at the economics or mechanics of this technology will show that it is simply too expensive and resource intensive to be truly feasible. Estimates suggest that CCS would increase the cost of coal electricity by 50-100% due to large capital costs and parasitic energy requirements of between 15-30% of a power plant’s electricity output.
Already wind and solar are cheaper than coal most of the world over, that holds especially true in sun and wind-rich South Africa where a renewable energy future is our most affordable path forward, according to the CSIR. So, coal is already losing out to renewables, and Standard Bank wants to sell us the idea that we should add an additional technology to new coal which would make it more expensive. The economics just does not add up.
Standard Bank’s policy says they will assess whether to fund coal depending on how energy poor a country is, thus touting the false notion that coal is the answer to energy poverty. With renewable energy economically outcompeting coal and offering a more accessible route to ending energy poverty, it seems Standard Bank’s policy would be locking poorer countries into outdated, expensive and polluting 20th century technologies, instead of allowing them to leapfrog into the 21st century.
Apart from appealing to the expensive and polluting myth of clean coal, Standard Bank’s coal policy includes nothing on air quality standards compliance. Coal has devastating impacts on human health the world over, and Standard Bank’s glaring omission tells us that while there are cleaner energy sources available, they’d prefer to pollute our lungs with coal power, although perhaps a bit more efficiently than before.
All-in-all, while it takes a small step in the right direction, Standard Bank’s policy is still deeply disappointing. The science is clear that we need to urgently ramp down climate-chaos-causing carbon pollution. Instead, Standard Bank wants to buck global financial trends and continue to finance coal – the most polluting form of energy, even if it is supposedly higher efficiency.
If I were a Standard Bank customer, I would tell them I am taking my money elsewhere unless they end new financing for coal, embrace a renewable energy future ASAP, and incorporate carbon risk in their activities. If they don’t, they will be going against global financial trends and putting their customers’ money at risk of stranded assets. Never mind the fact that they are putting our collective future at risk through financing air polluting, climate destabilizing coal power.
Dr. Alex Lenferna serves as South Africa Climate Justice Campaigner with 350.org. He Is a Mandela Rhodes and Fulbright Scholar with a PhD on climate justice form the University of Washington.