0 Banks Climate Change and Us Coal Rush

8/8/2019 0 Banks Climate Change and Us Coal Rush

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Banks,Climate Change& the New Coal Rush

221 Pine Street | Suite 500 | San Francisco, CA | 94104 | Tel (415) 398-4404 | www.RAN.org

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The two largest banks in the world are the leading financiers of a new U.S.

“Coal Rush” that will result in the construction of more than 150 coal-fired

power plants across the country—a recipe for climate destruction.

Transitioning to a clean energy future that prioritizes energy efficiency and

clean, renewable sources like solar and wind power will allow us to meet

our future energy needs, build a stronger economy, keep our communities

healthy, and curb climate change.

But as long as Citi and Bank of America continue to fund dirty energy, they

are holding back the resources needed for clean energy to flourish.

“I can’t understand why there aren’t ringsof young people blocking bulldozers, and

preventing them from constructing coal-fired power plants.”

—Al Gore, August, 20071


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Coal is over. Fund th e future.

The evidence is indisputable: humanactivity is disrupting the climate.2 Topscientists warn that the U.S. has 10 yearsor less to stabilize emissions and startfundamentally restructuring the way thatour energy needs are met.3 Failure to doso will result in dangerous concentrationsof greenhouse gases that will likely triggerecosystem destabilization, speciesextinctions, increased public healththreats, the creation of hundreds ofmillions of “climate refugees,” andsignificant declines in the globaleconomy.4

Despite overwhelming scientific evidenceof a looming climate crisis, growing publicdemand for action, and widespreadrecognition of the seriousness of theproblem, the federal government, mostbusinesses and the banking sector are stilloperating in “business as usual” mode.

Coal consumption is the leading cause ofclimate change. Globally, coal-firedpower plants are the largest source ofcarbon dioxide (CO2)—greater thantropical deforestation or oil use fortransportation.5 In the U.S., the electricitysector is the single largest source of CO2,responsible for almost 40 percent of thecountry’s total emissions (nearly 2.5 billiontons).6 While coal supplies approximatelyhalf of the U.S.’s electricity, it produces 80percent of the sector’s CO2 emissions.7

Coal has other toxic effects as well.According to the American LungAssociation, pollution from coal-firedpower plants is responsible for 24,000premature deaths in the U.S. every year.8 Coal-fired power plants are also the

country’s top source of toxic mercurypollution and a leading source ofradioactive waste. Coal mining isresponsible for thousands of deathsannually, and mountaintop removalmining and strip mining destroy entireecosystems and communities.9

Rather than phase out coal and reducedangerous emissions, coal’s proponentsare pushing for the construction of morethan 150 new coal-fired power plantsthroughout the United States. This new“Coal Rush” would add between 600million and 1.1 billion tons of additionalCO2 emissions annually10 and negatenearly every other effort currently on thetable to combat climate change11.Scientists such as Dr. James Hansen(NASA’s top climate scientist) and politicians like Al Gore, Senators JohnEdwards and John Kerr y, Senate MajorityLeader Harry Reid, and governors acrossthe country recognize the consequences ofincreased coal use and have called for animmediate halt to new coal development.

Constructing these new plants will costmore than $140 billion dollars, and eachplant will have a projected lifespan of 50

years.12 The choice of whether to spendbillions to build additional coal plants orto instead direct such resources towardclean energy options like solar, wind andenergy efficiency is key to stabilizingclimate change and keeping our society,economy and environment healthy forgenerations to come.


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Plans to construct 150 new coal-fired power plants

across the U.S. would resultin between 600 million and1.1 billion tons of additional CO 2 emissionsevery year.

This is equal to:

★ Adding 100-180

million new passengercars to U.S. roads;

★ The total greenhousegas emissions from theenergy production of

more than 95 percent of the world’scountries in 2002;and

★ Externalized social andenvironmental costs in

excess of $50-90billion per

year .



Citi: Banking on Climate Change

Citi (formerly Citigroup) is a leadingfinancier of fossil fuel energy and theworld’s top financier of coal.13 Accordingto Forbes, Citi’s assets of $2.2 trillionmake it not just the world's largest bank,but its biggest company.

In 2000, RAN launched a campaignagainst Citi that led to the bank’s 2004announcement of a then industry-leadingpolicy which addressed environmentaland human rights concerns associatedwith its project finance. Other banksquickly followed suit, and many havesince committed to the EquatorPrinciples.14 While these policies andprinciples represent an important steptoward the goal of socially andecologically responsible banking, theyhave largely ignored the fact that financedgreenhouse gas emissions contributeheavily toclimate change. In order toaddress the most pressing environmentalthreat of the 21st century, bank policiesand actions must address climate changemore comprehensively.

Is Citi Doing Enough?

In May 2007, Citi pledged to "direct $50billion over the next 10 years to addressglobal climate change throughinvestments…” Financing for renewableenergy, energy efficiency andimprovements in energy infrastructureamount to $31 billion spread across 10

years. While this may seem like asignificant commitment, it amounts to lessthan 0.2 percent of the company’s $2.2trillion in assets.15 What is Citi doing withthe other 99.8 percent?

Leading Financier of Dirty Energy

Citi underwrote more than $38 billiondollars for the energy industry in 2006.That same year, Citi underwrote just onetransaction for alternative energy.16 In2006 Citi financed 200 times moremoney for dirty energy than it did foralternative energy.

Funding the U.S. Coal Rush

Citi's financial contributions to the coalrush are responsible for millions of tons ofnew CO2 emissions annually. Accordingto Bloomberg, Citi has been a topunderwriter for the coal industry, issuingtwice as much money to this sector in2006 as its closest competitor. Citi is alsoa top financier of the electricity sector. In2006, Citi was a lead arranger for $11billion in financing for Texas utilitycompany TXU’s ill-advised proposal tobuild out 11 new coal-fired power plantsin Texas. By 2007, this proposal was onthe ropes due to growing opposition froma diverse coalition of environmental andcommunity groups. Citi then helped toarrange financing for a $45 billionprivate equity buyout of the dirty energygiant; TXU has scaled back its coal powerexpansion ambitions but still plans toconstruct three new coal-fired powerplants and is now considering nuclearenergy.

Violating Human Rights

Peabody Energy is the world’s largest coalmining company. In 2006, Citi helpedfinance more than $4 billion forPeabody.17 For 40 years, Dine (Navajo)


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and Hopi communities in Arizona havebeen ravaged by Peabody's Black Mesamine, which has taken land fromthousands of families, drained 2.5 milliongallons of water daily from the only

community water supply, and left a toxiclegacy along a 273-mile coal slurrypipeline. (See the case study on Peabodyin the section on Bank of America, below.)

In 2006, Citi helped finance $400 millionfor the Drummond Company, a majorglobal mining company with an extensivehistory of human rights abuses in SouthAmerica. Drummond is facing a lawsuitfor its alleged role in hiring paramilitary

groups to assassinate coal miners whowere attempting to unionize inColombia.18

Destroying Appal ac hia’s Mountains

Citi has financed billions of dollars to coalmining companies that practicemountaintop removal (MTR), includingMassey Energy, Arch Coal, Alpha NaturalResources and others.19 These companiesare responsible for the loss of more than amillion acres of Appalachian forests andmountains, the devastation ofcommunities, poisoned water supplies,and rampant poverty throughout theregion. Citi is continuing to bankroll thisdestruction of communities and ecosystemsdespite massive public opposition to MTR.

Citi’s Dirty Deals

American Electric Power

American Electric Power (AEP) is thelargest electricity generator in the U.S.AEP and its subsidiaries own and operateapproximately 80 power plants aroundthe nation, with nearly three-quarters oftheir electricity generation coming fromdirty, outdated coal-burning facilities. AEP

is the single biggest greenhouse gaspolluter in the U.S., dumping 163 milliontons of CO2 into the atmosphere every

year. It is also America’s biggest emitter oftoxic mercury and directly responsible for

every body of water in Ohio being undera health advisory due to high levels ofmercury found in the fish. AEP is alsodriving the destruction of communities andmountains throughout Appalachia as oneof the top buyers of coal extracted viamountaintop removal coal in the region.20

AEP is proposing to build five new coalplants in the Midwest and the South,including:★ 600 MW coal-fired plant in Meigs County,OH★ 600 MW coal-fired plant in Mason County,

WV★ 600 MW coal-fired plant in Hempstead

County, AR (SWEPCO)★ 950 MW coal-fired plant in Red Rock, OK★ 600 MW coal-fired plant in Wise County,

VA

Rather than join the fight to lowergreenhouse gas emissions, curb climatechange, and protect the environment, AEPis working to expand its dirty operations.The company is proposing to spend anestimated $6.4 billion dollars to constructthe aforementioned power plants,maintaining its claim to the dubious titleof "single largest source of climate change." With the help of Citi’s financing, AEP willadd 21 million tons of CO2 to its annualemissions.

Furthermore, AEP will then own ormanage nine coal-fired power plantswithin 10 miles of Meigs County, Ohio - acommunity already ravaged by health andenvironmental impacts from nearby coalpower plants, which are locally referred toas the “ring of fire.” In the 1940s and


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‘50s, the residents of Meigs County werepromised jobs and economic prosperity inexchange for the first two large coal-firedpower plants. Sixty years later, the countyis one of the poorest in Ohio and residents

continue to suffer from cancer and otherserious health problems that stem frompollution of the air, soil and water. Now,the barrage of false coal industry promiseshas returned and the local community isfighting for its survival.21

Citi is AEP’s top underwriter, contributingto more than $12 billion in financing thatAEP has received over the past seven

years.22 In 2006, Citi arranged a $3

billion loan for AEP, which provided thecompany with the capital to accelerateclimate change, degrade our air quality,and increase our reliance on dirty energy.

Dynegy

Already scarred by scandals from itsdealings with Enron and accusations ofprice manipulation during the Californiaenergy crisis in 2000, Dynegy barelyaverted bankruptcy amid accusations ofaccounting fraud in 2001. With the recentmerger of utility giants Dynegy and LSPower, the combined company nowwieldsa massive portfolio of electricity-generating facilities across the country.The merger also drastically changedDynegy’s power-generation portfolio.While its primary business model used tobe based on cleaner-burning natural gas,Dynegy is now at the forefront of the U.S.coal rush. Dynegy is sponsoring thecorporate sector’s largest build-out of newcoal power plants with its proposal tobuild eight additional coal-fired powerplants across the country. If these werebuilt, Dynegy would emit 65 million tonsof additional greenhouse gases every

year. These new coal plants will increase

the company's coal capacity by 260percent and annual CO2 emissions by200 percent,23 and the company hasalluded to even further expansion!

Dynegy’s proposed plants include:★ 500-1600 MW coal-fired plant in White

Pine County, NV★ 500-1100 MW coal-fired plant Marion City,

SC★ 1600 MW coal-fired plant in Sussex County,

VA★ 800 MW coal-fired plant in Riesel, TX★ 1000 MW coal-fired plant in Sequoyah, OK★ 750 MW coal-fired plant in Waterloo, IA★ 665 MW coal-fired plant in Osceola, AK★ (2) 600 MW coal-fired plants in Early

County, GA (LongLeaf Energy)★ (2) 650 MW coal-fired plants in Baldwin, IL

Citi is Dynegy’s top underwriter. In otherwords, Citi is the bank Dynegy turns tofund its dirty projects. Citi has helpedfinance more than $5 billion for Dynegy inrecent years.


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Bank of America: Killing communities and climate with coa l

In March 2007, Bank of America pledgedto support “environmentally sustainablebusiness” and “to address global climatechange.” Unfortunately, CEO Ken Lewis’lofty rhetoric is at odds with his company’strack record. In 2006, Bank of Americaspent nearly 100 times more money ondirty energy than it did supporting cleanenergy. Bank of America’s new climatepledge commits less than 0.2 percent ofthe company’s $1.5 trillion in assets tocurbing climate change. What is Bank ofAmerica doing with the other 99.8percent?

Accelerating Climate Change

Bank of America has lent billions ofdollars to companies planning to builddozens of new coal-fired power plants. Ifthese plants are built, Bank of Americawill be helping finance hundreds ofmillions of tons of new CO2 emissions.The bank’s clients include some of thelargest utility and power companies:American Electric Power, DominionResources, Dynegy, Florida Power & Light,Great Plains Energy, Peabody Energy,Southern Company and many more.

Destroying Appalachia’sMountains: A Case Study

Bank of America has financed billions of

dollars to companies that practicemountaintop removal (MTR), includingMassey Energy, Arch Coal, Alpha NaturalResources and others. These companiesare responsible for the loss of thousandsof square miles of Appalachian forestsand mountains and the devastation ofAppalachian communities. Yet, Bank of

America continues to bankroll thisdestruction.Mountaintop removal is a highlydestructive method of surface mining forcoal. Rather than remove coal from themountain,MTR removes the mountain fromthe coal. Throughout Appalachia,hundreds of mountains have beenflattened - first by clear-cutting forests, thenby blowing off the top layers of rock withpowerful explosives. Giant cranes(draglines) expose buried coal byscraping billions of tons of dirt off themountain. The debris is then dumped intoneighboring valleys and streams.

The Environmental Protection Agencyestimates that more than one million acresacross Appalachia have already been lostto MTR and that more than 1,200 miles ofstreams have been buried by these valley-fills.24 Flying rocks and debris from theexplosions have damaged neighboringhomes, and rampant flooding has becomea fact of life for coalfield residents. Forthese marginalized communities, MTR hasmeant the loss of thousands of jobs andgrowing health risks. Poverty hasincreased in MTR regions while corporateprofits soar.25

Coal sludge dams can contain billions ofgallons of toxic waste from miningoperations. Some are located directlyadjacent to homes and schools, offeringthe potential for deadly spills or breaches.One such dam, owned by Massey Energy,holds 2.8 billion gallons of toxic sludgejust 400 yards above Marsh ForkElementary School in West Virginia.26 In2000, a spill at a Kentucky mine owned


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by a Massey subsidiary sent 306 milliongallons of toxic coal sludge gushingthrough a nearby community. The spill,which was 30 times the size of the ExxonValdez accident, contaminated water

supplies for 27,000 residents and fouledhundreds of miles of waterways.

The biggest MTR coal mining companiesresponsible for this destruction inAppalachia are all being directly financedby Bank of America:

Alpha Natural Resources

In 2005, Bank of America helped finance$525 million dollars for Alpha NaturalResources (ANR), which operates 27surface mines throughout Virginia, WestVirginia, Kentucky and Pennsylvania.

Arch Coal

Arch is the second-biggest miningcompany in the U.S. and operates 21surface mines in Wyoming, Utah,Colorado, West Virginia, Kentucky andVirginia. Bank of America providedfinancing for a five-year, $700 milliondollar loan to Arch Coal.

Massey Energy

Massey is the most notorious ofmountaintop removal practitioners,owning the infamous coal silo and 2.8billion gallon toxic sludge reservoir aboveWest Virginia’s Marsh Fork ElementarySchool. Massey is currently being sued bythe EPA and faces $2.4 billion dollars infines for violating the Clean Water Act4,633 times. Bank of America helpedfinance a $175 million loan for Massey in2006 and held another $1 million inMassey notes as of 2005.

Foundation Coal

In 2006, Bank of America providedfinancing for an $835 million creditfacility for Foundation Coal, the fourth-

largest mining company in the UnitedStates.

Peabody Energy—Violating HumanRights: A Case Study

Peabody Energy is the world’s largest coalmining company, operating minesthroughout North America, SouthAmerica, and Australia. In addition tomining 240 million tons of coal per year,Peabody is proposing new coal-firedpower plants in New Mexico, Illinois andKentucky. These plants would emit morethan 21 million tons of CO2 every year. In2006, Bank of America helped financemore than $4 billion to Peabody Energy.

For 40 years, Dine (Navajo) and Hopicommunities in Arizona have beenravaged by Peabody’s Black Mesa mine,which affects the land rights of thousandsof families and has left a toxic legacyalong a 273-mile coal slurry pipeline, thelargest coal slurry pipeline in the world.

Located on stunning Native Americanreservation lands, the delicate ecosystemof Black Mesa has been destroyed byPeabody’s pursuit of cheap coal. In aregion that typically receives only 7-12inches of rain per year, the Black Mesamine drains 2.5 million gallons daily fromthe only community water supply. This hascaused massive damage to the aquiferand lowered water levels at some wells by100 feet. While the main purchaser(Southern California Edison’s MojaveGenerating Station) of this coal wasrecently shut down due to air qualityviolations, Peabody is still pushing toexpand its mining operations.27


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Stop Passing the Buck!

By far the biggest impact banks have onthe climate is through their financing ofgreenhouse gas-intensive industries,activities, projects and infrastructure. Citiand Bank of America have focused mostof their attention on reducing the muchsmaller climate footprint of their operations(such as offices). If these banks areseriously committed to combating climatechange and being environmental leaders,they must take responsibility for thegreenhouse gas emissions of the projectsthey finance, stop funding coal, andprioritize clean energy. Citi and Bank ofAmerica claim to care for the climate, butbankrolling dozens of new coal-firedpower plants and notorious coalcompanies says otherwise.

These banksmust set real goals to reducethe "financed emissions" from theirinvestment portfolio and start funding thefuture.

By transitioning to a clean energy futurethat prioritizes energy efficiency andclean, renewable sources like solar andwind power; we can meet our futureenergy needs, build a stronger economy,keep our communities healthy, and curbclimate change. Tell Citi and Bank ofAmerica to stop funding dirty coal projectsand to redirect their resources andinvestments toward clean energy. Don’t let

your money be used to fund climatechange.

The Energy Revolution: A coal-freefuture is possible

If invested in energy efficiency measures,the $144 billion being spent on new coalplants could reduce U.S. electricitydemand by roughly 19 percent by 2025and eliminate the need for new coalpower plants.28

By 2020, the U.S. could meet 20 percentof its electricity needs from renewablesources. This would avert the need for975 new power plants, allow for theclosing of 180 old coal plants and 14existing nuclear plants, and saveconsumers $440 billion.29

According to the Department of Energy,strong wind-power resources in just sixpercent of the U.S. could supply morethan 150 percent of current U.S. electricityconsumption.30


For more information about RAN’sGlobal Finance Campaign, visit:

www.dirtymoney.org

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Notes


1 “The Big Melt”, Nicholas Kristof, New York Times, August

16, 20072 http://ipcc-wg1.ucar.edu/wg1/wg1-report.html

3 Dr. James Hansen, NASA, July 12, 2007. “Coal is theenemy of the human race: James Hansen edition, A guestessay”, posted on http://gristmill.grist.org/story/2007/7/12/11229/8694

4 http://www.ipcc.ch/SPM13apr07.pdf; h ttp://www.hm-treasury.gov.uk/media/9/9/CLOSED_SHORT_executive_summary.pdf

5 http://en.wikipedia.org/wiki/

Image:Greenhouse_Gas_by_Sector.png6 http://www.epa.gov/climatechange/emissions/

co2_human.html

7 http://www.nrdc.org/air/polluti on/benchmarking/2004/benchmark2004.pdf

8 Abt Associates. Power Plant Emissions: Particulate Matter-related Health Damages and the Benefits of AlternativeReduction Scenarios. Prepared for the Clean Air TaskForce, 2004, and cited in the American Lung Association,State of the Air: 2007, available at http://lungaction.org/reports/sota07_protecting1.html

9 Mountaintop Removal Mining: Stealing Appalachia,Mountain Justice Summer Newsletter, May 2005, http://mountainjusticesummer.org/facts/steps.php

10 http://www.nrdc.org/air/poll ution/benchmarking/2004/benchmark2004.pdf

11 http://pdf.wri.org/wri_analysis_of_ctproposals-110th_2.pdf

12 http://www.netl.doe.gov/publications/press/2006/06046-Coa l-Fired_Power_Plants_Database.html

13 In 2006, Citi bank was the number 1 underwriter of coal

globally according to Bloomberg.14 http://www.equator-principles.com/

15 Balance Sheet as of 6/30/07

16 League table and related information from Bloomberg.

17 Information on Citi financing from Peabody Energy SECfilings

18 The Estate of Valmore Lacarno Rodriquez vs. DrummondCompany, Inc., Drummond Ltd, and Garry N. Drummond,

http://www.iradvocates.org/Drummond.html19 Information from coal company SEC filings.

20 Sierra Club Fact Sheet on America Electric Power http://ohio.sierraclub.org/central/AEP.asp

21 EPA studies estimate that fine particle pollution from powerplants shortens the lives of 1,743 Ohioans each year andthat Ohioans have the fourth highest risk in the country ofdying from power plant pollution. In Ohio, 2,577,634children live within 30 miles of a power plant, the area inwhich the greatest health impacts are felt. Clean Air TaskForce, Children at Risk, How Air Pollution from PowerPlants Threatens the Health of America's Children. May2002. www.cleartheair.org.

22 Bloomberg Terminal custom league table. Queryperformed on 9/6/07

23 Innovest Report -"Dynegy: Carbon Risk Accompanies LSPower Merger," 2007

24 Mountaintop Mining/Valley Fills in Appalachia FinalProgrammatic Environmental Impact Statement. 2005.United States Environmental Protection Agency. p. 7http://www.epa.gov/region03/mtntop/index.htm .

Accessed on September 25, 200725 Mountaintop Removal Mining: Stealing Appalachia,

Mountain Justice Summer Newsletter, May 2005, http://mountainjusticesummer.org/facts/steps.php

26 The Story of Marsh Fork Elementary School, Coal RiverMountain Watch, http://www.crmw.net/tools.php

27 http://www.blackmesawatercoalition.org/black_mesa.html

28 US Public Interest Research Group, “Making Sense of the‘Coal Rush’: The Consequences of Expanding America’s

Dependence on Coal,” July 200629 Union of Concerned Scientists, American Council for an

Energy Efficient Economy, Tellus Institute report “CleanEnergy Blueprint,” October 2001

30 Wind and Hydropower Technology Program, USDepartment of Energy, Energy Efficiency and RenewableEnergy. website accessed on September 25, 2007www.eere.energy.gov/windandhydro/wind_potential.html

http://www.equator-principles.com/

http://www.netl.doe.gov/publications/press/2006/06046-Coal-Fired_Power_Plants_Database.html



http://pdf.wri.org/wri_analysis_of_ctproposals-110th_2.pdf


http://www.nrdc.org/air/pollution/benchmarking/2004/benchmark2004.pdf


http://lungaction.org/reports/sota07_protecting1.html





http://www.epa.gov/climatechange/emissions/co2_human.html


http://en.wikipedia.org/wiki/Image:Greenhouse_Gas_by_Sector.png


http://www.hm-treasury.gov.uk/media/9/9/CLOSED_SHORT_executive_summary.pdf


http://www.ipcc.ch/SPM13apr07.pdf


http://gristmill.grist.org/story/2007/7/12/11229/8694


http://ipcc-wg1.ucar.edu/wg1/wg1-report.html

http://www.epa.gov/region03/mtntop/index.htm

http://ohio.sierraclub.org/central/AEP.asp

http://www.eere.energy.gov/windandhydro/wind_potential.html

http://www.eere.energy.gov/windandhydro/wind_potential.html



















































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0 Banks Climate Change and Us Coal Rush