War Against Coal

Brian Hicks

Written By Brian Hicks

Posted July 25, 2013

There seems to be a developing war on coal across continents.

Take the European Investment Bank, for example. That’s the European Union’s financing agency, and Reuters reports that it has stated it will cease lending to coal-fired power stations in general in an attempt to help the EU achieve energy goals and emissions levels.

coalSpecifically, it appears that both new and refurbished plants that rely on coal will not receive funding if they emit more than 550 grams of CO2 per kilowatt-hour. Incidentally, this level could also be met by burning biomass or a plant that uses heat and power.

Reuters quotes:

“The vote to introduce an emissions performance standard represents a step-change in the EU’s fight against climate change and puts the bankers ahead of politicians in terms of tangible action,” said Ingrid Holmes, of environmental think-tank E3G in a statement.

And it isn’t just the EU. Over here in the U.S., President Obama declared just this month that coal-fired power stations would face more stringent emissions standards shortly, while simultaneously urging that international lenders look more closely to their dealings with coal-fired plants. The only exemptions, it seems, are developing countries in Asia and elsewhere, where coal remains in demand.

What’s interesting is the dynamic between the Western world and the Eastern world. On the one hand, you have political leaders and environmentally-concerned entities protesting our reliance on coal for power, citing harmful emissions and pollution concerns. On the other hand, you have a roster of leading banks and financial companies—Reuters names Barclays (NYSE: BCS), Deutsche Bank (NYSE: DB), and Credit Suisse (NYSE: CS) among others on the European side, and JP Morgan Chase (NYSE: JPM), Citigroup (NYSE: C), Bank of America (NYSE: BAC), and Morgan Stanley (NYSE: MS) on the American side—that are quite invested in coal. Is it likely that these companies would want to reduce their exposure to coal, given that coal mines and power plants over in Asia could produce attractive yields and returns?

Just last year, for example, Abu Dhabi’s state-owned energy company TAQA entered into a $12 billion deal with Turkey, whereby it will mine and produce power from lignite, which happens to be the “dirtiest” variety of coal. And the China Development Bank, on the other hand, is set to loan $3.6 billion to Ukraine to further the gasification of coal—something that has been compared to oil-sands crude harvesting in terms of high polluting factor.

Reuters also mentions that the World Resources Institute claims not only that India and China are expected to lead the world for energy demand over the next several years, but that other developing nations are going to develop coal-fired plants and coal mines in large numbers.

Making things worse, the International Energy Agency has noted that coal could actually trump oil to become the world’s primary energy source, which could only spell further trouble as far as global warming is concerned.

If, as the Wall Street Journal notes, Europe’s lending banks are beginning to reduce their investment in coal and trying to coax the EU away from coal, what might replace it over there?

One solution could be seen in the case of the Renewables Infrastructure Group Ltd., which has successfully raised $460 million in what has become the U.K.’s biggest IPO for a clean-energy company to date, Bloomberg reports. The Group will use this funding to purchase 14 onshore wind farms and develop 4 photovoltaic solar facilities that will together generate as much as 276 MW of power. The projects will be situated in the U.K., France, and Ireland.

And that’s not the only big-time clean-energy IPO. Earlier in July, Greencoat U.K. Wind Plc (LSE: UKW) raised 260 million pounds, and the Bluefield Solar Income Fund Ltd. (LSE: BSIF) raised 130 million pounds. Evidently, there is a distinct surge in interest as far as investing in clean energy goes.

Prickly Times for an American Transition

Meanwhile in the U.S., vested interests are crying foul at the perceived “war” on coal that President Obama is waging. The trigger for these protests appears to be a plan that the President disclosed earlier this summer, which basically proposes emissions caps on new and existing coal-fired plants.

The EPA has contributed to the fuss by missing a deadline by which it was supposed to indicate new emissions standards for new power plants, the Daily Caller reports. Those standards, too, would have taken action against coal-fired plants—by banning their construction outright. The White House has since declared that the EPA would pursue separate emissions protocols for natural gas and coal-fired plants.

While it is certain that coal is among the most polluting of power sources, it’s debatable whether this is the best time for urging a mass transition away from what has, traditionally, been a safe employment area. After all, coal produced 37 percent of the nation’s electricity just last year.

It’s true that we’re experiencing a natural gas bonanza, and we’re revising our infrastructure to reflect that. And we definitely don’t need to add to the polluting emissions that the Eastern nations are already spewing out. Nonetheless, expect fervent protests should the President’s move for a transition away from coal continue.


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