Big Banks Are Selling Us Out on Climate Change
We're nearing the end of the window of opportunity we have to avert the catastrophic effects predicted from the earth's changing climate. We're either going to sink or swim. Our best hope at this time is to drastically reduce our greenhouse gas (GHG) emissions, like carbon dioxide.
Global leaders are putting their heads together to come up with solutions. Across the world, countries and municipalities are passing legislation to limit GHG emissions; people are cutting consumption; new technologies are being developed to further alternative energy sources. And yet, in the United States, the coal industry has us poised to move in the absolute wrong direction. Right now, there are about 150 new coal-fired power plants on the drawing board. The amount of polluting emissions they will release is staggering -- between 600 million and 1.1 billion tons of CO2 emissions every year, for the next 50 years. And this, according to Rainforest Action Network (RAN), will basically negate every other effort currently being considered to fight climate change.
Over the last 20 years since Bill McKibben wrote the first global warming book for a general audience, only a few things have changed: Scientists have realized the problem is worse than they thought, and the crisis is coming on faster than predicted.
"The final question as to whether we can address it in serious fashion is whether the coal that is in the ground stays in the ground," said McKibben. "We already know that we are going to burn all the oil we can get our hands on because we have gotten our hands on most of it and it is intensely valuable. Coal, on the other hand, is the question. If the 150 power plants get built, there is no use talking about compact fluorescent light bulbs or mass transit or any of those other things ... we'll have no hope of averting climate change short of catastrophic proportions."
And what's the quickest way to halt those plants? Follow the money.
Without funding from banks, companies don't have the resources to front the $140 billion necessary to construct all those new dirty power plants. Rainforest Action Network learned that the money trail is not so complicated; it leads to two main banks -- Citi and Bank of America.
The Case Against Citi
Citi currently holds the title as the world's largest bank and biggest company. A few years ago, they also were leading the way in addressing environmental and human rights concerns in their industry. As RAN details in their new report "Banks, Climate Change and the New Coal Rush": In May 2007, Citi pledged to "direct $50 billion over the next 10 years to address global climate change through investments ..." Financing for renewable energy, energy efficiency and improvements in energy infrastructure amount to $31 billion spread across 10 years. While this may seem like a significant commitment, it amounts to less than 0.2 percent of the company's $2.2 trillion in assets. What is Citi doing with the other 99.8 percent? The answer to that question is that Citi has been busy funding dirty energy. Last year they gave 200 times more money for dirty energy than for clean. In the process they've helped underwrite some of the world's worst environmental and human rights offenders. Here's a sample:
- In 2006 they gave $4 billion to Peabody Energy, the world's largest coal mining company, which has been ravaging Dine and Hopi lands for 40 years, taking 2.5 million gallons of water out of their desert watershed each day and leaving behind a trail of toxic waste.
- In 2006 they gave $400 million to Drummond, a mining company, which is facing repercussions for allegedly hiring paramilitary groups to kill Colombian coal miners trying to unionize.
- They've given billions of dollars to Massey Energy, Arch Coal, Alpha Natural Resources, and other coal companies that practice mountaintop removal (MTR) coal mining that involves blowing the tops off of Appalachian mountains, filling valleys, burying streams, poisoning waterways and impoverishing communities.
- Citi helps finance American Electric Power (to the tune of $12 billion), which is working to maintain its designation as the single biggest GHG polluter in the country by building five new dirty coal plants, adding another 21 million tons of CO2 to their annual emissions of 163 million tons.
- Citi is also the top underwriter of scandal-tainted Dynegy (involved in the Enron debacle and price manipulations in California) that is leading the industries' coal rush and plans to build eight new plants, increasing their CO2 emissions by 200 percent.
The case against Bank of America
Bank of America is not far behind Citi. It has also pledged to become an environmentally sustainable business, but it doesn't seem to walk its talk. Last year it spent 100 times more on dirty than clean energy, and it gives less than 0.2 percent to helping fight climate change.
Like Citi, BOA is making friends with some of the world's worst companies.
- They've given big money to companies that are devastating Appalachia with MTR mining. Arch Coal got $700 million and long-repudiated Massey Energy scored $175 million.
- The disastrous Peabody Energy got $4 billion last year from BOA, which should help them on their way to building new plants in New Mexico, Illinois and Kentucky.
- Alpha Natural Resources also got $525 million to help its 27 surfaces mines in Appalachia.
The stupidity factor
The reasons for moving away from coal are overwhelming. Scientists tell us we have about a decade to stabilize CO2 emissions and the easiest way to do that is to cut down on coal consumption -- the number one contributor to climate change.
Each year, the American Lung Association reports, an estimated 24,000 people in the United States die prematurely from pollution emitted by coal-fired power plants. And it is not just the burning of coal that is dangerous -- extraction, especially practices like MTR coal mining that blow the tops off mountains, are devastating to the land and the people.
"The banks are funding this war on Appalachia, and they are funding domestic terrorism," said Judy Bonds, a 10th generation mountaineer in West Virginia who is the founder of Coal River Mountain Watch and the winner of the Goldman Environmental Prize.
"We are being bombed every day by three and a half million pounds of explosives. We can smell and taste explosives. They damage our homes, shake our nerves and poison our air," she said. "The banks are helping coal to take the wealth from us, to steal us blind and leave us in poverty, and leave us in poison." Despite the overwhelming environmental and humanitarian concerns, even from an investment standpoint, putting your chips on coal is a sure loss.
In the last few years, a political upswing has occurred in the fight against climate change. Al Gore's film and the success of grassroots movements like Step It Up, which organized 1,400 rallies in all 50 states, has garnered momentum.
Other countries have already begun regulating carbon, and the United States will follow suit. Currently there are a handful of bills in Congress to cap emissions and establish a carbon-trading program in the United States, making polluters pay.
"Coal looks cheap at the moment because we charge it nothing for its environmental damage," said Bill McKibben. "But when we do, you need to be a real sucker for wanting anything to do with new coal."
Coal, he added, "is about to become as expensive fiscally as it is environmentally."
Laying out money for dirty energy just doesn't make good business sense. When investors look at the proposition of financing coal plants, they have to look at future returns, and when you look at banks like Citi and BOA, said Leslie Lowe of the Interfaith Center on Corporate Responsibility, "you have ask, 'what are they thinking?' It is clear we will have a cost for carbon in this country, so every coal plant that emits more CO2 will be a liability long-term."
Funding the future
Fortunately, we have the choice to move this country in the right direction by pressuring Citi and BOA to fund clean, instead of dirty, energy.
If those banks took the $141 billion they plan to spend on building new coal plants, and instead invested it in energy efficient measures, they could reduce electricity demand by 19 percent by 2025.
RAN reports that, "By 2020, the U.S. could meet 20 percent of its electricity needs from renewable sources. This would avert the need for 975 new power plants, allow for the closing of 180 old coal plants and 14 existing nuclear plants, and save consumers $440 billion." The push for no new coal is being echoed across the country. Step It Up and 1 Sky Campaign are both calling for a moratorium on new coal power plants, as well as an 80 percent carbon reduction by 2050 and the creation of 5 million green jobs to help us conserve 20 percent of our energy by 2015.
"By transitioning to a clean energy future that prioritizes energy efficiency -- and clean renewable sources like solar and wind power -- we can meet our future energy needs, build a stronger economy, keep our communities healthy and curb climate change," RAN's report advises. "Tell Citi and Bank of America to stop funding dirty coal projects and to redirect their resources and investments toward clean energy. Don't let your money be used to fund climate change."