Major U.S. banks are once again lending to coal companies, despite their past declaration to abandon the industry, a study from an environmental group found.
About three years ago, the U.S. government was entering the Paris climate accord, natural gas emerged as a competitive fossil fuel source, and the three biggest U.S. coal companies were undergoing bankruptcy. Amidst the industry’s turmoil, America’s largest banks announced they would scale back their loans to coal companies.
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“The bank has a responsibility to help mitigate climate change by leveraging our scale and resources to accelerate the transition from a high-carbon to a low-carbon society,” read a Bank of America coal policy statement in May 2015.
Andrew Plepler, Bank of America’s head of corporate social responsibility, went into further detail, adding: “Our new policy reflects our decision to continue to reduce our credit exposure over time to the coal mining sector globally.”
Bank of America’s statements reflected those of other major U.S. banks who planned to shift away from coal. Environmental groups had pressured them for years to stop supporting fossil fuels. With the coal industry faltering anyways, the decision to walk away was made much easier. (RELATED: Cities Suing Big Oil Over Climate Change Forced To Answer About The Benefits Of Fossil Fuels)
However, a lot has changed since that time. Alpha Natural Resources, Peabody Energy and Arch Coal have arisen from their bankruptcy woes. More notably, the arrival of President Donald Trump — and his promises to breathe life back into the coal industry — has given analysts reason to rethink the future of fossil fuels.
An analysis from Rainforest Action Network, an environmental group, found that America’s five biggest banks are not only issuing loans to coal companies again, but in some cases doing so at a greater rate than before. For example, JPMorgan’s coal lending dropped from $570 million in 2014 to $32 million in 2015. However, JPMorgan skyrocketed its lending in 2017 to $654 million. Similar loan strategies were adopted by Goldman Sachs, Bank of America, Morgan Stanley and others. The five major U.S. banks doled out around $1.5 billion in new coal-related loans in 2017, according to Rainforest Action Network.
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These lending habits indicate the coal industry, while generally in decline, is still a major player in the country’s generation of electricity.
“A few years ago when a lot of these major banks came out and said that they would no longer be supporting the sector, I think, a lot of people generalized in a major way,” said Standard & Poor analyst Chiza Vitta in a New York Times article published Monday. “The sector is in decline, but it remains a very important component of electricity generation.”
Some bank officials, however, are pushing back against RAN’s findings.
“We disagree with the report’s conclusions,” stated JPMorgan spokesman Brian Marchiony. “Over the last two years, we have declined to participate in dozens of transactions related to coal-fired power plants and coal mining, and our credit exposure to companies deriving the majority of their revenues from coal has declined by about a third.”