IPCC report leaves no doubts: drop coal finance now!

Coal mining in India © Brot für die Welt, J. Boethling

Despite some initiatives to phase out the financing of coal projects, financial resources dedicated to fossil fuels worldwide are still several times higher than those earmarked for climate finance. This stands in direct contradiction to the ambitious climate policy that is urgently needed with regard to a new climate treaty in Paris.

2013 was a record year for coal finance. BankTrack’s “Banking on Coal 2014″ report states that in 2013, the coal industry received at least €66 billion from private banks – among which Deutsche Bank is in tenth place. These massive investments also have an impact on climate policy. An Oxfam report notes that the fossil fuel industry spends €44 million every year for lobbying the European Union. The companies invest a further $600 billion in exploration, mining, processing and transport infrastructure for coal, oil and natural gas. Coal finance stands in contrast to climate finance from the government side as well. If we take into account subsidies (direct payments as well as tax breaks and similar benefits) and the cost of damage to the environment and human health (due to air pollution and other factors) borne by the public, fossil fuels receive over $1.9 trillion annually in support worldwide.

Ambitious climate protection would look very different and would mean massive losses for the industry. If global warming were to be limited to less than 2°C, many of the fossil fuel companies’ reserves would be in the form of unburnable carbon, i.e. reserves already listed on their balance sheets, but which must be left in the ground. A ‘filthy triangle’ of political standstill, short-sightedness in the financial sector and vested interests of a number of industries is hindering and delaying the urgently needed change of course.

The IPCC Synthesis Report, which was drawn up in Copenhagen from October 27 to November 1, 2014, once again underscores the urgent need to phase out coal finance. The report leaves no doubts about the human influence on our climate. The effects of climate change are already being felt, and will intensify in the future. Those already at a disadvantage, such as the poorest countries, are set to suffer even more. Not much time remains to meet the 2°C goal, as roughly two thirds of the emissions that would be consistent with this target have already been released into the atmosphere. The obvious conclusion for banks, industry and policymakers must be to wind down coal-based power generation and the financing of fossil fuels immediately. Currently available renewable energy sources and green technologies that do not involve risks like those inherent to carbon capture and storage (CSS), but which have numerous positive side effects, must instead become the focus of massive investment.

The German government is also obliged to move forward in this respect. At the national level, it will need to decide on the closure of more coal-fired power plants in December when the cabinet discusses Environment Minister Barbara Hendricks’ climate action program. And at the international level, far further-reaching action to phase out coal finance will be required than the move announced by Minister Hendricks at the climate summit in New York.

Christine Lottje