Are banks to blame for climate change?
A report released by non-governmental groups at the climate talks in Durban, South Africa, said that major global banks bear responsibility for global warming by funding utilities and mining companies to build coal-fired power plants
Durban — Major global banks are exacerbating the fight against global warming by supplying power utilities and mining firms with ample funds to build coal-fired plants, according to a report released by non-governmental groups at the climate talks in Durban.
The study examined the portfolios of 93 major banks and found that coal financing supplied by those institutions to the coal industry totaled 232 billion euros ($309.4 billion) since 2005 when the Kyoto Protocol came into force.
"If banks provide money for these projects, they will wreck all attempts to limit global warming to 2 degrees Celsius," said Heffa Schuecking of environmental think tank urgewald who worked on the report.
The Kyoto pact was set up to reduce greenhouse gases emitted by developed countries by an average of 5.2 percent below 1990 levels during the five-year period up to 2012.
"Between 2005 and 2010, coal financing almost doubled. If we don't take banks to task now, coal financing will continue to grow," said Tristen Taylor from environmental group Earthlife.
A 600 MW power plant costs around $2 billion to build, making it necessary for developers to rely heavily on banks to provide and mobilize the money they need.
The report argued that coal mining was harmful to natural landscapes, communities and water resources while coal-fired power plants are blamed for major emissions and waste.
Each new power plant is likely to add millions of tons of annual emissions of CO2 over the lifetime of these plants of 30-40 years.
The country has big plans for rolling out renewable energy investments to cut its reliance on coal - now 85 percent of its energy mix - but this is likely to take years to materialize.
Many emerging countries have no option than fossil fuels and coal to power their development. For banks, the investments can be seen as practical projects to help finance growth.
South Africa has vast coal reserves and green energy is more challenging and costly to build on a meaningful scale, which means coal is likely to be part of the country's energy portfolio for some time to come.
State-owned power utility Eskom spews out some 225 million tons of CO2 each year.
The report urged banks to shift their portfolios towards renewable energy and energy efficiency projects and implement CO2 reduction goals for the emissions they help finance.
(Editing by James Jukwey)