Investments from banks are critical in the business to secure capital to open the door to new ventures. And while many banks have agreed to net-zero investments, many are not following through. In fact, between 2019 and 2021, banks have lent $1.5 trillion to coal projects.
Two of the biggest contributors are even members of the Net-Zero Banking Alliance. This goes completely against the entire principle behind their claims and makes it hard to trust them, just like the corporations that do the same.
And as long as banks continue to pour money into new coal projects, coal won’t disappear.
What Excuse Are Banks Using?
Many banks are actually trying to defend this behavior by saying that the money is to help them transition away from coal.
Now, if the money was actually being exclusively used for this purpose, it would be pretty reasonable. After all, these businesses cannot just stop what they’re doing overnight without going bankrupt.
However, this just isn’t the case.
The majority of the money is being used on new coal-based projects that have nothing to do with transitioning away. And as long as they keep getting access to more and more money, they have no incentive to stop.
And with the demand for coal at an all-time high, it’s doubtful investments will stop any time soon.
Why Is the Demand for Coal Still Rising?
The demand for coal is rising because the demand for electricity is rising faster than expected.
Much of this is the direct result of the pandemic. As lockdown conditions have come and gone, factories that get impacted are forced to stop production and when they can resume, they are producing as much as possible.
The biggest culprit is China. In 2021, the country had to resort to power rationing because there wasn’t enough electricity to go around. And the manufacturing sector was the main user.
The quickest way the country could produce more energy was to build more coal plants, which they are doing.
Also, to be clear, we are not just talking about a few plants either. They are building three times the number of coal plants the rest of the world is building combined.
As a result, the largest emitter of greenhouse gases is generating more than ever.
Cutting Off the Money Supply Can solve the Problem
One thing is very clear, if companies that need money to mine or use coal can’t get access to money, they won’t last long.
This is by far the most effective strategy to force these companies to move away from coal. Yet despite all of their statements, banks are still lending money for new coal projects. And this is still the case following the recent COP26 summit.
During which, countries around the world formally agreed to begin reducing coal usage to achieve net-zero goals.
Unfortunately, no matter what happens, the world is unable to move away from fossil fuels. And very soon, we will pass the point of no return.
Robert has been following and writing about environmental stories for years at GreenGeeks. He believes that highlighting environmentally friendly practices can help promote change in every household.