Coal - French banks are not doing the math

Thursday, January 1, 2015

France -

France is preparing to host the 21st UN Conference on Climate Change (COP21) in December 2015 at which time the international community will agree upon the next steps to take, in accordance with the Kyoto Protocol, in order to limit global warming to below the threshold it deems critical, 2°C. However, little to nothing has been done to stop the extraction of fossil fuels from the ground nor to oversee the practices of financing and investment banks, who are actually at the core of the fossil fuel industry.

To discontinue the extraction of fossil fuels, particularly coal, will condition the global capacity to limit the total amount of carbon that can still be emitted to stay below the threshold of 2° C. For this to happen, according to a recent study published in Nature, over 80% of coal reserves must remain in the soil to maintain the Earth’s temperature under 2°C2. However, coal production has increased 69% since 2000, the installed capacity of power plants has increased by 35% since 2005, around the time of the signing the Kyoto Protocol. On this road leading to climate disaster, French finance and investment banks have their share of responsibility for this.

According to the report of the Friends of the Earth, Coal: Dirty money from French banks, French banks - BNP Paribas, Credit Agricole, Societe Generale, BPCE / Natixis and Crédit Mutuel - supported the coal sector to the tune of more than 30 billion Euros between 2005 and April 2014. A figure that makes France the fourth biggest funder of coal during this period. And despite their commitments to fight against climate change, the support French banks provide to the coal sector increased by 218% between 2005 and 2013. These billions in support go towards mining projects and coal plants whose impacts are not only extremely harmful to the local environment and climate, but also detrimental to the rights of the populations.

In South Africa, a country where 90% of the electricty produced comes from coal, the 5 aforementioned banking groups all participated in 2009 and 2010 in the financing of the two biggest coal power plants in the world, Medupi and Kusile, built in part by Alstom, using loans guaranteed by the French Agency for Export Credit, Coface. Despite the climate urgency, these banks are financing new projects for coal power plants, including one for de Engie (formerly GDF Suez), which would weigh down the climate bill of a country that is already among the largest emitters in the world. As opposed to Coface, which has put an end to its support of coal plants, French banks continue to support them supposedly in order to meet the electricity needs of developing countries. According to them, coal remains the most accessible and affordable energy source that can meet those needs. Yet, the example of South Africa shows the great potential of renewable energies, especially the very costly impacts of an economy and energy system based on coal, of which the benefits for the population are derisory, in terms employment and nonexistent in terms of access to electricity Aware of the environmental, climate and health externalities of coal, the banks aim to condition their support, in some cases, to using the best technology labeled as being under the «clean coal» umbrella, and theoretically even reducing greenhouse gas (GHG) emissions from coal infrastructures. Once again, the example of South Africa shows that the concept of «clean coal» promoted by the coal industry cannot reconcile the irreconcilable, coal and climate, and coal and development.

Friends of the Earth conducted a field study to document the impacts of support from French banks to the coal sector in South Africa and identify those who really benefit from, and those are on the losing end as a result of its development. The list of people interviewed - members of the community, departments representatives of South African government and Eskom, the South African public company for production and distribution of electricity, civil society organizations and researchers, scholars and experts on energy and climate issues in South Africa – can be found at the end of the report. This report presents a portion of the results of our mission.

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