Bank was biggest financier of MTR in 2013 but now expects method used to extract coal in Appalachian mountains will soon be phased out

This article is more than 5 years old

This article is more than 5 years old

Barclays has ended its financing of a controversial coal mining method known as mountaintop removal and said time is running out for the practice.

The bank was the world’s biggest financier of mountain top removal (MTR) in 2013, when it loaned MTR companies $550m, according to one analysis.

But in a policy document, released without publicity during March, Barclays reversed its position. Companies that engage in MTR coal mining will no longer receive support from the bank unless they commit to moving out of MTR “within a reasonable timeframe”.

MTR is widely used in the Appalachian mountains in the eastern US. It involves blasting and shifting the tops of hills and mountains to expose the coal beneath. The rubble and spoil is dumped in the valleys below.

In the US states of Kentucky, Tennessee, West Virginia, and Virginia the method has been vehemently opposed by climate campaigners and local activists for its environmental impacts, including deforestation and the pollution of watercourses, and climate change impact.

MTR has also been linked to severe health impacts. Last year a team of scientists from West Virginia University linked the dust created by the strip mining to lung cancer in nearby communities.

Mining using MTR has been economically marginalised by falling US shale gas prices and increasingly stringent legislation on the coal industry. Barclays said it expected the practice to wind down in the coming years.

“Due to a confluence of market forces and regulatory scrutiny in recent years, we believe that MTR is a mining method that will be phased out in the near to intermediate term,” said the policy.

“Barclays has never funded any MTR projects or developments directly,” said a Barclays spokeswoman. She said the announcement on MTR was “an additional explicit policy position on MTR coal mining” to go with its “longstanding and stringent environmental risk policies and practices covering transactions with environmentally sensitive sectors such as mining”.

In March, financial analysts at Carbon Tracker said the US coal industry had entered a structural decline, which would see many companies and mines close.

According to a BankTrack analyst, Barclays helped to raise finance for Alpha Natural Resources during 2013. At the time Alpha was the world’s largest MTR miner. Alpha said it has now discontinued the practice.

The decision by Barclays follows similar policy changes by PNC Bank, JP Morgan, Wells Fargo, BNP Paribas, RBS and UBS. But campaigners said the Barclays decision was the most significant yet.

Rainforest Action Network senior climate and energy campaigner Ben Collins said: “To go from being the number one banker of mountaintop removal coal mining in 2013 to exiting MTR finance entirely is a clear indication that Barclays understands the devastating environmental and health consequences of this toxic practice.”

Barclays said the company recognised that coal mining in the Appalachian region was managed by robust regulation. But that it was “subject to intense political, judicial and regulatory debate over the last decade due to negative environmental and social impacts on the one hand, and positive economic impacts on the localities in which it is employed, on the other”.

Sam Lund-Harket, energy justice campaigner at Global Justice Now said the Barclays’ decision was important in the winding down of mountaintop coal mining.

“But MTR is just one aspect of the bank’s appalling record in fossil fuel finance. Research last year showed that Barclays was the fourth largest financier internationally of the coal sector as a whole. There’s an urgent need for Barclays and other banks to turn off the finance flows that are enabling the expansion of the fossil fuel industry and exacerbating the climate crisis.”

• This article was amended on 8 April 2015. An earlier version said Alpha Natural Resources was the world’s largest mountaintop removal miner. It did not conduct any MTR mining in 2014, and has no plans for any in 2015.