Coal power plant

Blackrock invests US$ 11 billion in Coal Plant Developers.

30% of investments come from 7 companies only.

670,000 MW of new coal power are planned to be built in 59 countries.

Investments in Coal Power Expansion

On October 8, 2018, the Intergovernmental Panel on Climate Change (IPCC) released its Special Report on Global Warming of 1.5°C. 91 authors from 40 countries analyzed 6000 studies. In their report, they conclude that a global temperature rise of 1.5°C as compared to 2°C would lessen the number of extreme weather events. Only half the number of people would suffer from not having enough of water. Not all coral reefs would have to die. To limit global temperature rise to 1.5°C, coal use for electricity production must be drastically reduced and global coal exploitation must be completely phased-out globally by 2050.

Coal Power Expansion Continues

However, current coal expansion plans are putting the IPCC’s target out of reach. The number of coal-fired power stations operating in the world is still growing. The Paris Agreement was signed in late 2015. Since then, 92,345 MW of new coal power plants have started operating. This is as much as all of Japan’s and Russia’s coal plants put together (CoalSwarm). What is even more shocking, 670,000 MW are currently in planning or already under construction in 59 countries. Hopefully, not all of these coal plants will be built. Still, every plant that starts operation takes our planet further away from the 1.5°C target.

Never-Ending Support for Coal

Also, unfortunately, institutional investors, banks and insurance companies are still supporting the coal industry. Urgewald, BankTrack, Friends of the Earth France, Re:Common and Rainforest Action Network have commissioned financial research to reveal the investors behind the newly planned coal plants. On this website, we focus on institutional investors and the role they play in financing the coal industry. (To find out more about banks click here and to find out more about insurances click here).

This year’s research identifies 1,211 institutional investors with a total investment of US$139.4 billion in coal plant developers. These are investments held by pension funds, insurance companies, mutual funds, asset management companies, commercial banks, sovereign wealth funds and other types of institutional investors. The research finds that the largest 7 investors are responsible for 30% of the investments in the 120 coal plant development companies (as identified by urgewald in October 2018). Find below the Dirty 30 institutional investors, together accounting for 57% of investments in these 120 companies. (To search this year's finance data click here).

 

Where Does the Money Come From?

Looking at institutional investors, the US is the country that invests most in the top 120 coal plant development companies by far. It holds 35.1% of all worldwide investments in this sector. Next comes Japan with 14% and Europe with 15.7%. Other large sums of investments into coal power expansion flow from Malaysia, India, China, South Korea and Canada.

 

Chart of Institutional Investors by Country

Coal Companies Overlooked by Investors Wanting to Divest

The companies building new coal-fired power station are a special category in themselves. They are not always typical coal companies at first sight or they are entirely new to the coal business. Harbin Electric from China, for example, does not produce any coal power itself. However, the company is one of the biggest manufacturers of new coal plants. Toyo Ink from Malaysia is an industrial ink producer, but has decided to venture into the coal plant building business. The 120 Top Coal Plant Developers List was created to blacklist companies building new coal plants and also point out the companies whose coal involvement is not clear at first sight.

Typical coal exclusion criteria often do not capture the coal plant developers. Some large investors have committed to divest companies that have a coal share of revenue and a coal share of power production of more than 30%. This policy only excludes half of the 120 coal plant development companies. What is needed is an exclusion of all companies building new coal plants immediately.

 

47% of Investors are not captured by criterion

 

Investors Making a Start in the Right Direction

At the climate finance day in Paris in December 2017, AXA announced that they would divest from coal using Urgewald’s Global Coal Exit List as a guide. All companies that build 3GW or more of new coal plants are divested. In May 2018, Allianz followed suit excluding all investments in coal plant developers above 500 MW. The crux is that these two divestment policies only count for the insurers own investment and not for the assets they manage for others. This is why Allianz still ranks 34 on the investors’ list and AXA ranks 40.

Conclusion

The time to phase out coal and to limit global temperature rise to 1.5°C is running out faster than we realize.  Billions of dollars flow into in the expansion of coal power plants every day. This undermines all efforts of climate protection and all agreements made by the nations of the world. Investors must quickly tighten their coal investment policies. Banks and insurance companies play an important part in the coal expansion game also. They too need to move a lot quicker to stop the expansion of the coal industry and limit global climate change.