Titled “Coal Havens: The policy loopholes keeping coal finance alive in Asia”, the report underlines, Asia today is the ‘growth engine’ of the global coal industry despite the world agreeing to transition away from fossil fuels at COP28 in December 2023. To prove its point, the report cites the International Energy Agency (IEA), which say, global coal demand reached a record high in 2022 amidst the global energy crisis, rising by 4% year-on-year to 8.42 billion tonnes (Bt).
According to IEA, “The growth engine for coal demand, which increased in both power and non-power sectors, was once again Asia. In China, demand rose by 4.6%, or 200 million tonnes (Mt). In India, it increased by 9%, or 97 Mt; and in Indonesia, where nickel smelters became a significant source of demand growth, it shot up by 32%, or 49 Mt”.
The BankTrack report asserts, all this is happening because “most of Asia’s major banks have either very weak or non-existent exclusions of coal from their investment portfolios, leaving the door open to continued investment in climate destruction.”
The report seeks to draw attention to the fact that the coal financiers are resisting the energy transition in some of the largest hotspots for coal expansion in the world, with a focus on Indonesia, the Philippines, South Korea, Singapore and India. “Although China dwarfs the rest of the world in terms of coal power financing and generation capacity in the pipeline, these countries in South, East and Southeast Asia are the most notable areas of coal power outside that”, it says.
According to the report, China accounts for 59% of Asian coal financing, with most of the remaining expansion taking place elsewhere in Asia, including 16% in South Asia (India, Pakistan, and Bangladesh), 11% in Southeast Asia (Vietnam, Philippines, Indonesia, Cambodia), and 9% in east Asia (Japan and South Korea). “Coal provides about half of all power generated in the region”, it adds.
Quoting the International Energy Agency (IEA) forecasts, report says, coal power usage up to 2025 will grow more in Southeast Asia (14%) than in India (7%) or China (5%). It describes Indonesia and Vietnam as places where coal dependency is high and transitions are likely to be challenging.
“National policies on coal are hugely important in shifting coal markets in Asia, where state ownership of banks and coal developers is relatively high”, it says, offering the example of India in this context: “Captive coal is increasingly being represented among the coal plants that are clearing bureaucratic hurdles in India.”
According to IEA, “The growth engine for coal demand, which increased in both power and non-power sectors, was once again Asia. In China, demand rose by 4.6%, or 200 million tonnes (Mt). In India, it increased by 9%, or 97 Mt; and in Indonesia, where nickel smelters became a significant source of demand growth, it shot up by 32%, or 49 Mt”.
The BankTrack report asserts, all this is happening because “most of Asia’s major banks have either very weak or non-existent exclusions of coal from their investment portfolios, leaving the door open to continued investment in climate destruction.”
The report seeks to draw attention to the fact that the coal financiers are resisting the energy transition in some of the largest hotspots for coal expansion in the world, with a focus on Indonesia, the Philippines, South Korea, Singapore and India. “Although China dwarfs the rest of the world in terms of coal power financing and generation capacity in the pipeline, these countries in South, East and Southeast Asia are the most notable areas of coal power outside that”, it says.
According to the report, China accounts for 59% of Asian coal financing, with most of the remaining expansion taking place elsewhere in Asia, including 16% in South Asia (India, Pakistan, and Bangladesh), 11% in Southeast Asia (Vietnam, Philippines, Indonesia, Cambodia), and 9% in east Asia (Japan and South Korea). “Coal provides about half of all power generated in the region”, it adds.
Quoting the International Energy Agency (IEA) forecasts, report says, coal power usage up to 2025 will grow more in Southeast Asia (14%) than in India (7%) or China (5%). It describes Indonesia and Vietnam as places where coal dependency is high and transitions are likely to be challenging.
“National policies on coal are hugely important in shifting coal markets in Asia, where state ownership of banks and coal developers is relatively high”, it says, offering the example of India in this context: “Captive coal is increasingly being represented among the coal plants that are clearing bureaucratic hurdles in India.”
While in 2022 no new non-captive coal plants received environmental clearance in India, JSW Steel’s “fiercely opposed” Utkal steel plant captive coal power (Odisha) facility received environmental clearance in 2022, as also the Bodal captive plant in Gujarat, and the Malibrahmani captive plant in Odisha, which is projected to provide power to a steel plant in Angul, Odisha. .
Quoting the Toxic Bonds Network, which collects data on USD and euro-denominated bonds, the report says, “Coal developers across South Korea, Indonesia, India and China have relied on banks to underwrite their bond issuances to raise capital for their coal empires.”
“In India, the Adani Group has 15 bonds worth USD $7.8bn outstanding, and has relied on its most loyal financiers of Barclays and Standard Chartered to continue underwriting those issuances, propping up the company’s vast and corrupt coal infrastructure”, the report claims.
Quoting the Toxic Bonds Network, which collects data on USD and euro-denominated bonds, the report says, “Coal developers across South Korea, Indonesia, India and China have relied on banks to underwrite their bond issuances to raise capital for their coal empires.”
“In India, the Adani Group has 15 bonds worth USD $7.8bn outstanding, and has relied on its most loyal financiers of Barclays and Standard Chartered to continue underwriting those issuances, propping up the company’s vast and corrupt coal infrastructure”, the report claims.
In India, only two of 34 banks have exclusion policy that prohibits lending for creating new capacities for coal-based energy
Pointing out that India’s Power Finance Corporation “has 10 bonds outstanding worth USD $4.5bn”, the report says, “Financing for thermal coal from 2005 to August 2023 came from large domestic entities like the Power Finance Corporation (USD $31bn), Rural Electrification Corporation (USD $19bn), and the State Bank of India (USD $9bn).”
According to the report, the level of financing by domestic financiers “dwarfed that of even the most active international lenders in Indian coal”. Thus, the top three international lenders (JBIC, or Japan’s export credit agency, China Development Bank and Standard Chartered) provided USD $2bn combined. In fact, seven-and-a-half times more finance was “provided collectively by domestic financiers (USD $86bn) for thermal coal, compared to international lenders (USD $6.5bn)”, it nots.
“Meanwhile”, the report claims, “International lenders like Barclays, Standard Chartered, Citi, Bank of America and DBS, as well as the Japanese megabanks SMBC, MUFG and Mizuho still support India’s coal baron, Adani. Barclays is a particularly steadfast supporter of the Adani Group, in spite of its financial turmoil and controversy – a relationship that should end for the sake of people and planet.”
“A notable point in the cases of Indonesia and India is that the domestic financiers are almost all state-owned, and therefore a significant driver of dependence on coal is national energy policy including subsidies and energy tariffs”, asserts the report.
In an analysis of the banks that finance coal fired power plants, the report says, “Axis Bank as having no coal policy”; Bank of Baroda’s “Business Responsibility and Sustainable Development Manual” does not mention coal. Same is the situation with regard to the Union Bank of India’s sustainability policy, Punjab and Sind Bank, and Bank of India. As for India’s Export-Import Bank it “provided USD $310m for the refurbishment of Hwange power station in Zimbabwe.”
In fact, states the report, in India, “Only two of the 34 banks (Federal Bank and Survoday Small Finance Bank) have an exclusion policy that prohibits lending for the construction of new coal power plants or the extension of an existing coal power plant.” Additionally, it underlines, “Federal Bank has also committed to not finance oil and gas exploration activities, putting it at the top of the table on that criterion.”
According to the report, the level of financing by domestic financiers “dwarfed that of even the most active international lenders in Indian coal”. Thus, the top three international lenders (JBIC, or Japan’s export credit agency, China Development Bank and Standard Chartered) provided USD $2bn combined. In fact, seven-and-a-half times more finance was “provided collectively by domestic financiers (USD $86bn) for thermal coal, compared to international lenders (USD $6.5bn)”, it nots.
“Meanwhile”, the report claims, “International lenders like Barclays, Standard Chartered, Citi, Bank of America and DBS, as well as the Japanese megabanks SMBC, MUFG and Mizuho still support India’s coal baron, Adani. Barclays is a particularly steadfast supporter of the Adani Group, in spite of its financial turmoil and controversy – a relationship that should end for the sake of people and planet.”
“A notable point in the cases of Indonesia and India is that the domestic financiers are almost all state-owned, and therefore a significant driver of dependence on coal is national energy policy including subsidies and energy tariffs”, asserts the report.
In an analysis of the banks that finance coal fired power plants, the report says, “Axis Bank as having no coal policy”; Bank of Baroda’s “Business Responsibility and Sustainable Development Manual” does not mention coal. Same is the situation with regard to the Union Bank of India’s sustainability policy, Punjab and Sind Bank, and Bank of India. As for India’s Export-Import Bank it “provided USD $310m for the refurbishment of Hwange power station in Zimbabwe.”
In fact, states the report, in India, “Only two of the 34 banks (Federal Bank and Survoday Small Finance Bank) have an exclusion policy that prohibits lending for the construction of new coal power plants or the extension of an existing coal power plant.” Additionally, it underlines, “Federal Bank has also committed to not finance oil and gas exploration activities, putting it at the top of the table on that criterion.”
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