HSBC, Europe’s largest bank, recently announced it would no longer finance new coal power plant projects, new greenfield tar sands projects, and no offshore oil or gas projects in the Arctic. The announcement is a significant step forward in what is shaping up to be an industry policy trend in regards to fossil fuel finance. But, the announcement fine print came with a major loophole, which allows the bank to continue funding coal power development in three countries — Bangladesh, Indonesia, and Vietnam — “up until the end of 2023.” The loophole soured the announcement for the climate movement and anyone who was paying attention.
Of course, there is the fundamental issue that the climate crisis is a global crisis — emissions in one part of the world affect us all. Underneath the science of a global atmosphere, the loophole is also reflective of the long history of the fossil fuel industry using poverty as a cover for destructive development.
"Dear finance sector, you’re on notice. We see you dipping into fossil fuel industry branded manipulation."
One of the most common talking points from the fossil fuel industry about global demand is in regards to energy poverty in the global south.
“Unfortunately, the Pope’s Encyclical, does not appear to address the tragedy of global energy poverty...social leaders – like Pope Francis – must work to support policies that bring about new advances in fossil energy technologies,” wrote a lobbyist for Arch Coal in an email blast to industry friendlies. This frustrating — and by and large effective — tactic of the industry pretending to care about poverty and development issues to advance their business plans is emulated in the finance industry’s response to public demand for no new fossil fuel finance.
For example, Bloomberg News reported a potential crack in the world’s most extensive source of coal funding, the Japanese banks. In the article, Bloomberg reports Japan’s largest bank, MUFG, is currently reviewing their coal lending policies, potentially in response to public outcry. Counter to the excitement, the CEO of the bank, Nobuyuki Hirano, buffered in a public statement, “There is still demand for coal power, and it is a mission of a financial institution to address such needs.”
To be clear, no one wants “coal energy,” they want energy — affordable and reliable. Coal might be the “cheapest” form of energy development today, but that doesn’t make it the right thing to do. Slave labor is the cheapest form of productivity, but most banks would never openly sponsor human trafficking nor they should they sponsor coal. It’s also too much for a bank to claim their “mission” is to address the needs of the general global public. No one really believes that.
Let me be clear; energy poverty is a real and major issue. Over 1.2 billion people around the world lack access to electricity, while indoor pollution — from cooking and heating with charcoal and wood — kills around 4 million people a year. A recent study conducted by 12 international poverty and development organizations showed that “Not only will more coal plants do nothing for energy access, they will impose unnecessary suffering on the poor.” (Read David Roberts' article about it here).
In HSBC’s new fossil fuel finance policy statement, they say, “A targeted and time-limited exception will apply to [Bangladesh, Indonesia, and Vietnam] in order to appropriately balance local humanitarian needs with the need to transition to a low-carbon economy.”
Dear finance sector, you’re on notice. We see you dipping into fossil fuel industry branded manipulation. We don’t believe you are oriented or have the expertise to address global poverty. And if you were, fossil fuel finance would be counterproductive to “humanitarian needs.” Building new fossil fuel infrastructure in the global south sweeps the health impact externalities into those countries, makes a clean energy transition more difficult, and adds to the climate crisis. Renewable energy for the public is possible and available. Bangladesh, for example, is the largest Solar Home Systems market in the world with now more than four million units installed.
While there may be a profit to be made for the banks financing coal plants, there is a net negative impact for the communities on the frontlines of fossil fuel development. Fossil fuels are not a solution to energy poverty, they are a compounding problem.