Global investors double down on finance flight from coal

There were two clear messages in the many energy investments and emissions strategies announced at the recent One Planet Summit in Paris, oil faces some new pressures and coal is on the outer, except for the controversial Adani coal mine in central Queensland.

Consider, for example, these announcements:

Bloomberg newsagency reports few of these coal announcements were surprising.

Both AXA and ING are merely enhancing earlier commitments to limit their coal investments, albeit with significantly greater financial commitments to divest.

Bloomberg reports that these announcements all concern thermal coal used in power generation, not metallurgical coal, which used in steelmaking.

Metallurgical coal is a relatively small proportion of total coal production, about a billion tonnes a year out of more than seven billion tonnes total.

While natural gas, renewable energy and greater energy efficiency compete directly with coal-fired power, nothing really competes with coal used in steelmaking.

The coal sector itself is pulling back its future plans.

Bloomberg Intelligence’s Rob Barnett has a handy chart showing the capital expenditures in BI’s Global Coal Producers Competitive Index.

There is one place where thermal coal capital expenditures, or at least a plan for it, is still looking up.

The massive Carmichael mine in the northern Australian state of Queensland, if it is built, would produce 60 million tonnes a year for 60 years.

However, as Bloomberg reports building Carmichael, proposed by the Indian conglomerate Adani, would first require financing the project.

In the past few years, Australia’s major banks have steadily pulled back from financing new thermal coal projects.

National Australia Bank’s terse announcement on December 14 is just the latest.

Four Chinese banks now also have explicitly stated that they will not fund Carmichael.

China Merchant Bank’s one-line statement to Australian advocacy group Market Forces makes NAB’s announcement positively verbose.

As Bloomberg reports bankers, it seems, are today’s canary in the coalmine.