As the Trump administration threatens to withdraw the US from the Paris Agreement and double up on efforts to revive a slowing fossil fuels industry, the rest of the world is pulling out of coal projects and redirecting investment towards renewables in an effort to make good on climate pledges.
Deutsche Bank, Germany’s largest bank, announced that it will cease to finance coal projects in an effort to meet its commitments under the Paris Agreement to limit global warming to 2 degrees above pre-industrial levels.
According to a statement released on Wednesday, Deutsche Bank and its subsidiaries will not grant new financing for greenfield thermal coal mining and new coal-fired plant construction. Additionally, the bank plans to gradually reduce its existing exposure to the thermal coal mining sector.
Deutsche Bank cites the pledges it made at last year’s Paris climate conference to help combat global warming as the motivation behind the decision.
The lender made a similar move in 2014, pulling out of a deal to finance a controversial coal port expansion at Abbot Point in Queensland, Australia due to the projects potential negative impact on the Great Barrier Reef and public pressure.
Deutsche Bank aren’t the only ones moving away from fossil fuel investments. Legal group Arabella Advisors has found that global funds for fossil fuels — including those stemming from the World Bank — are on the decline.
The World Bank’s Development Policy Financing (DPF) program, which accounts for one-third of all World Bank funding and reached $16 billion in 2016, identifies funding opportunities to accelerate the low-carbon transition in developing countries under the Bank’s Climate Action Plan and shift financing away from fossil fuels.
Last year, the World Bank backed a new $1.15 billion global platform aimed at boosting investment and implementing sustainable practices across developing cities around the world. Additionally, the Bank pledged to spend 28 percent of its investments directly on climate change projects, and that all of its future spending would take global warming into consideration.
Despite these steps, the Bank Information Center (BIC) has released a report accusing the DPF program of “undercutting” renewables and rainforest protection initiatives across Peru, Indonesia, Egypt and Mozambique. The report claims that for a nine-year period between 2007 and 2016, $5 billion of the funds were used on “tax breaks for coal power plants and coal export infrastructure.”
The report says that DPF funds have provided subsidies for three natural gas pipe networks and 26 new oil and gas concessions in the Amazon. Coal power plants on the islands of Kalimantan and Sumatra in Indonesia have also been favored over proposed geothermal plants. BIC claims that these subsidies are turning Indonesia “into a major coal producer” and could increase coal’s share of the Indonesian energy mix from 35 percent to 66 percent by 2025.
The World Bank has also been accused of funding oil and gas projects in Egypt totaling 12.5GW of new coal capacity, and subsidizing coal transport railways in Mozambique. Here to, BIC claims that renewables such as geothermal, solar and wind were not targeted by the subsidies.
The World Bank feels that its engagement in the four countries mentioned has been “grossly misrepresented” by the BIC report, and is adamant that policy loans have not been used to support the growth of coal.
“The report does not capture the World Bank’s broader energy work, which involves not only development policy loans, but a mix of interventions — policy reforms, investments, technical assistance — that work together to promote climate-smart growth and increased energy access,” a World Bank spokesperson said. "In each of the countries mentioned in the report, the World Bank’s development policy loans do not promote the use of coal, but help support a shift towards a cleaner energy mix and low-carbon growth."
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Published Feb 2, 2017 12pm EST / 9am PST / 5pm GMT / 6pm CET