Perth Solar Energy

Clean energy to trump coal for bank lending

WESTPAC, the country’s second-largest bank, has flagged its lending policies will favour energy efficiency and clean energy projects over new coal-fired power stations as momentum grows for the introduction of a price on carbon emissions.

A report to be released by Greenpeace today shows the big banks provided loans worth $5.5 billion to the coal industry over the past five years – seven times more than the $784 million lent to the renewable energy sector.

None of the banks would refuse to finance new coal-fired power stations yesterday, but the Westpac media relations manager, Jane Counsel, said apart from historical customers, the bank’s future funding would be likely to focus on projects leaning towards energy efficiency and clean energy, to help make the transition to a low emissions economy.

”Westpac supports the development of an efficient, affordable, safe and secure energy system that recognises and addresses the need to reduce carbon emissions,” she said in a statement.

“Within Australia, in the short to medium term, we do not expect that new coal-fired electricity generation will be attractive from an environmental viewpoint. Therefore the application of technological solutions to reduce emissions is critical.

”We will continue to work with government and with our customers as regulatory frameworks around the introduction of carbon constraints firm up in the jurisdictions where we operate.”

ANZ, recently ranked the world’s most sustainable bank, was the biggest financier to Australia’s coal industry according to the report, by the Dutch economic consultancy Profundo, providing loans worth $1.7 billion.

It was followed by the Commonwealth Bank ($1.6 billion), NAB and Westpac ($1 million each), and Suncorp ($227 million). Two other institutions surveyed, Bendigo Bank and the Mecu credit union, did not lend to the coal industry.

ANZ also provided more finance for coal-fired power stations than any other bank surveyed, at $650 million, compared with Commonwealth ($546 million), Westpac ($454 million), NAB ($382 million) and Suncorp ($18 million).

Greenpeace wants the banks to rule out financing a dozen planned power stations around the country, including Macquarie Generation’s Bayswater B plant in the Hunter Valley and Delta Electricity’s Mount Piper extension near Lithgow, which are both proposed as gas or coal-fired.

A Greenpeace campaigner, John Hepburn, said most Australians opposed construction of new coal-fired power stations. “A lot of people have just voted for action on climate change. Those people would actually be quite outraged to realise their savings in the bank are being used to make the problem worse.”

Commonwealth Bank said it had no financing commitments to the construction of any new coal-fired power stations and had the lowest debt exposure to single asset Australian coal-fired generation financings among the big banks.

A spokesman for ANZ, which topped bank sector rankings last month in the global Dow Jones Sustainability Index for 2010, said the bank was Australia’s leading renewable energy financier and “renewable projects already [represent] one-third of our energy portfolio”.

Greenpeace said the Profundo survey, which collected publicly available data on loans to coal-fired power stations, coalmines and coal port infrastructure, showed bank branding on sustainability was a “triumph of spin over substance”.

A Profundo analyst, Jan Willem van Gelder, said in Amsterdam that banks around the world were struggling to develop responsible lending policies, given climate change and the need to finance a shift to more sustainable energy production.

Mr van Gelder said if there was less supply of capital for coalmining companies and coal-fired power stations, then loan interest rates would rise and coal industry projects would become less attractive. “I don’t think that is yet the case, but it wouldn’t surprise me if it would happen in near future,” he said.

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