Follow The Money: Global Investors Flee Coal Power Like A Hot Potato

June 11th, 2019 by Tina Casey

It’s no secret that the long term outlook for coal power in the global market is rather gloomy these days, and the decline could accelerate as the money pipeline dries up. According to one recent analysis, since 2013 more than 100 leading financial institutions have been slowly cutting thermal coal off from easy access to money, and the pace appears to be picking up.

Coal Power On The Rocks

The new analysis comes from the Institute for Energy Economics and Financial Analysis, which has been tracking the relationship between coal power and the global investment community.

According to IEEFA, the World Bank touched off a trickle of “progressive strangulation” activity in 2013. Progressive strangulation refers to placing new restrictions and other obstacles in between coal power developers and financial instruments, in addition to eliminating coal power from funding outright.

The IEEFA analysis cites 112 banks and financial institutions currently on the progressive strangulation list, including the recent addition of the European Bank of Reconstruction and Development. Barclays Bank UK, Export Development Canada, Nedbank of South Africa, Varma of Finland, and the Vienna Insurance Group are also among the financial leaders to announce recent “policy rethinks” for coal power.

Coal Power Down, Gas To Follow

Last week our friends over at Power Technology took a deep dive in to the IEEFA report with its author Tim Buckley. He cited the low cost of renewables and growing demand for renewables in two globally significant markets, India and Japan, as indications that the flight of investment dollars from coal power is accelerating.

Climate change is another factor, as institutional investors start to align their fiduciary duties with commitments under the 2015 Paris Agreement. In one highlight of the United Nations COP24 climate conference last year, a group of 415 investment funds called for a phaseout of coal power by 2050.

Natural gas stakeholders have been quick to capitalize on the demise of coal power, but the high times may be over soon as renewables begin to outcompete gas turbines for grid-supplied electricity. Renewables are also a better fit for the emerging distributed energy resources model, too.

The canary in the coal mine is GE, which bet bigly on both coal power and natural gas only to draw a losing hand when the renewable energy transition took hold more quickly than expected.

That’s somewhat ironic considering that GE was among the leading US corporations to call for filling the climate action void after US President* Donald J. Trump withdrew the country from the Paris Accord shortly after taking office in 2017.

The good news for GE fans is the company’s progress on advanced wind turbines and other related wind power technology, earning the company a slot in the ranks of leading wind industry players. Last year the company announced that it was selling off its fossil fuel interests to focus on renewables among other areas.

The Slippery Slope To A Nuclear Rennaisance

IEEFA’s info dovetails with Carbon Tracker, IRENA, and other groups that follow the financial health of the coal power market, and renewable energy stakeholders are not the only ones jumping in to fill the energy gap.

Nuclear energy fans are also anticipating that the urgency of climate action will compel governments to align their energy policies with a more aggressive pursuit of nuclear energy, in order to avoid the carbon emissions whack-a-mole that happens when you replace coal plants with natural gas.

Michael Bloomberg’s new $500 million Beyond Carbon campaign leans heavily toward renewables but it also appears to leave wiggle room for ramping up global nuclear energy capacity. Fellow US billionaire Bill Gates is also chasing the nuclear energy unicorn.

For that matter, GE did hold on to its GE Hitachi Nuclear Energy arm, which is currently involved in the Energy Department’s advanced modular nuclear reactor R&D program.

The prospects for ramping up nuclear capacity in the US are slim to none, but elsewhere around the globe central governments have more control over what energy power generation facilities are constructed, and where.

That leaves export opportunities open for US nuclear technology, but it also creates new geopolitical headaches. One high profile example is the Saudi Kingdom’s nuclear program, which counts on US assistance even while the nation’s First Deputy Minister and Crown Prince Mohamed bin Salman stands accused of orchestrating the gruesome murder of a US resident, the journalist Jamal Khashoggi.

CleanTechnica is reaching out to IEEFA for its take on the role of nuclear energy in the swift decarbonization of global power generation, so stay tuned for more on that.

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*Developing story.

Photo: coal terminal via US Department of Energy.









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