As one of the top international banks involved in lucrative coal finance deals around the world, BNP Paribas is directly responsible for fuelling the expansion of an energy source that is both wrecking the climate and destroying local communities. BNP Paribas, as the top financer of coal in France, and the 9th largest backer of the coal sector in the world, is among the most controversial corporate sponsors of the international climate talks to be held in Paris this year. Between 2005 and April 2014, the French bank has contributed no less than 15.6 billion euros to the coal sector (mines and coal-fired power plants).
Coal is not only the main source of global greenhouse gas emissions; coal mines and coal-fired power plants are also a major source of air and water pollution, resource depletion, and social disruptions for neighbouring communities. Despite this, coal use has been growing at an exponential rate in the past decade.
Beyond the obvious villains, the mining and power companies, the global banking sector plays a key role in bankrolling the coal industry and making the continuation of coal extraction possible in spite of its climate footprint and its disastrous impacts. Every year, through project and corporate loans, or bond and share underwriting, international banks such as BNP Paribas have been handing out billions of euros to fund the operations of coal mining or coal-based power companies, and provide crucial assistance to the development of new large-scale coal projects.
A key player in controversial coal projects throughout the world
BNP Paribas’ financing of the coal sector include some of the most controversial projects in the world. In South Africa the bank is involved in the construction of two new huge coal-fired power plants, Medupi and Kusile. Together, they will emit 60 million tonnes of carbon every year, increasing South Africa’s greenhouse gas emissions by 17% and further exacerbating the devastating impacts of climate change on poor communities.
In India, BNP Paribas is the only international bank involved in the infamous Tata Mundra power plant, on the coast of Gujarat, through a 327 million dollar loan. The 4150 MW plant, which became fully operational in 2013, has been mired in controversy ever since construction began. It has all but ruined the livelihood of local communities. It spits massive amounts of hot water into the marine environment, destroying mangroves and fish breeding grounds. As a result, fish catches have declined dramatically. Coal dust and fly ash falling from the sky contaminates farmlands and fish left out to dry in the sun. Increased saltwater intrusions in local groundwater bodies have jeopardised irrigation and access to freshwater, in an area where this resource was already scarce. Local people complain that chest pains and respiratory problems are on the rise. The excuse for building Tata Mundra was that it would provide cheap electricity to millions of Indians, but it turned out to be far less economically viable than originally claimed: the company has already had to ask for an electricity price hike.
The internal auditing bodies of two of the plant’s main financial backers, the International Finance Corporation (World Bank) and the Asian Development Bank, have issued scathing reports about the Tata Mundra project and the lack of adequate consideration of its impacts and of proper compensation for affected communities.
Last April, local fishermen and farmers turned to the US courts and initiated a lawsuit against the International Finance Corporation for its role in the destruction of their livelihoods . Although it claims to be ‘tracking’ the Tata Mundra Project, BNP Paribas has kept almost totally silent about the allegations concerning the plant’s impacts and about its own responsibility.
Talk is cheap
These last years, BNP Paribas has stepped up its communication on climate change, but it has not changed significantly its funding practices. In 2011, BNP Paribas adopted a new ‘policy’ to guide its funding of the coal sector and, allegedly, minimise the environmental and climate impacts of its financing. But the bank’s coal funding has actually steadily increased since the adoption of this new policy! Despite their claims to fight climate change , its annual investments in coal more than tripled between 2005 and 2013. In 2015, BNP Paribas boasts itself about its energy mix that is ahead of the global energy mix in terms of carbon emissions, despite the fact that fossil fuels still represents 59,5 of its energy mix (23,5% of coal), while renewables represent only 7,8% of it (versus 68% and 5% in the global energy mix).
Today, because of growing evidence of its disastrous impacts and of civil society pressure, dozens of investors and institutions have chosen a more effective and straightforward path, by moving totally away from the coal sector. In France, Crédit agricole is already building its own dynamic to phase-out coal investments, and announced in May 2015 it would no longer finance coal mining projects or companies specialized in coal mining. BNP Paribas has announced it will publish a new climate strategy but to this day, it hasn’t put an end to its massive support to the coal industry.
Banks such as BNP Paribas will be a pivotal player for the survival or the demise of the coal industry – a demise which would not only be good for stabilizing the global climate, but would also deliver huge benefits for the health and livelihood of countless communities across the world.