(Bloomberg) – The coal industry has backed away from its commitments to phase out existing plants and halt new investment, putting the planet on an orbit that could lead to a “collapse of our climate systems,” according to a study led by the nonprofit jungle.
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While warnings from climate scientists “just keep getting worse,” data revealing the actions of coal companies remain “depressingly consistent,” said Urgewald director Heffa Schücking. Almost half of the coal industry is expanding, with China leading the way, according to the analysis released on Thursday.
Nonprofit organizations aren’t the only ones warning of the devastating consequences of the continued expansion of the dirtiest fossil fuel. Goldman Sachs Group Inc’s Michele Della Vigna, Wall Street Bank’s head of natural resources research for EMEA, has called the rise in coal financing a “massive setback” for the climate and warns that Europe’s dependence on coal and even diesel may be over might this winter.
Scientists, meanwhile, have singled out coal, noting that there is no hope of limiting temperature rises to the critical 1.5 degrees Celsius threshold if the world continues to fund new projects. The United Nations Intergovernmental Panel on Climate Change says the world could face a temperature rise of more than double the 1.5C threshold as emissions continue to rise. That would make large parts of the planet uninhabitable.
“The vast majority” of companies in the so-called Global Coal Exit List (GCEL) “still have no intention of shutting down coal plants, which is driving us towards a collapse of our climate systems,” Schuking said. “A real transition requires clear and timely coal phase-out dates.”
GCEL, a survey of more than 1,000 coal companies, shows that 46% are still developing new coal plants. Only 56 companies — 5.3% of the total — have announced a coal phase-out date. But the deadline setters had also agreed on “ridiculously late” dates, said Urgewald.
More money is also flowing from the financial industry into the coal. Reclaim Finance estimates 190 banks and asset managers still don’t have a carbon policy. Another 272 have either weak or inadequate strategies, and only 28 have effective exit strategies.
In the first nine months of 2022, banks provided $26 billion in loans and borrowing to the coal industry, up 36% from the same period in 2021, according to data compiled by Bloomberg. Most of this came from Chinese firms, with China Securities and China Everbright Bank listed as the top two coal bond underwriters.
Coal has seen a rebound this year as Russia’s invasion of Ukraine has boosted all fossil fuel markets. The International Energy Agency estimates that consumption of the dirtiest fuel will increase by 0.7% this year and then hit an all-time high in 2023.
Almost a year ago, governments left the COP26 climate summit in Scotland with a promise to reduce their use of coal. They will meet again next month for the COP27 climate summit in Egypt, with the talks being overshadowed by the energy crisis, war and the prospect of a recession.
Still, climate think tank E3G says it’s not too late for coal companies to deliver on their reduction commitments. “We’ve seen an increase in the number of coal plants being kept online,” said Leo Roberts, research manager of E3G’s coal team. But that doesn’t undermine the pledges made at last year’s COP26, he said.
However, according to Shuecking, it is clear that most of the coal industry is “not being converted”.
It’s “either developing new coal projects or extending the life of existing coal plants,” she said. “Delaying has become a new form of climate denial.”
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