For immediate release: Friday, April 20, 2018, 3pm PT
Blair Fitzgibbon, Soundspeed PR, (202) 503-6141, Blair@soundspeedpr.com
Europe’s Biggest Bank Takes a Step Back from Coal, Tar Sands and Arctic Oil
Rainforest Action Network Responds to HSBC’s New Policy on Extreme Fossil Fuels
UK banking giant HSBC announced a new energy policy today which continues the trend of financial institutions bowing to pressure to stop funding extreme fossil fuels. The policy prohibits financing of new coal power plant projects, new greenfield tar sands projects, and offshore oil or gas projects in the Arctic. The policy also contains ambiguous language which appears to prohibit lending to companies if 50% or more of the proceeds would be spent on prohibited projects.
HSBC is positioning its policy as a commitment to “stop providing financing for new coal-fired power plants.” However it contains a major loophole which allows HSBC to keep funding coal power in three countries with major coal expansion plans — Bangladesh, Indonesia and Vietnam — up until the end of 2023.”
Paddy McCully, Rainforest Action Network Climate and Energy Program Director, said:
“HSBC’s new policy is a mixed bag. That Europe’s number one banker of tar sands is distancing itself from the sector is encouraging and further evidence that the writing is on the wall for tar sands oil. But its coal power policy has a glaring, 80 gigawatt-sized loophole, and on both coal and tar sands HSBC still lags far behind its leading global peers."
“HSBC’s restriction on direct finance for tar sands mines and pipelines is the latest signal that the financial sector is gradually losing its appetite for these risky projects. But to truly end its support for tar sands pipelines, HSBC must sell its stake in the Trans Mountain project loan, and exclude finance for companies like Enbridge, TransCanada and Kinder Morgan that are planning new pipelines. Most tar sands infrastructure is supported by bank loans and underwriting services to companies, not by direct financing for projects. HSBC should also confirm that its project finance prohibition rules out support for pipelines that are claimed to be expansions of existing projects, such as Line 3 in Minnesota.”
“HSBC’s restrictions on corporate finance for tar sands extraction and pipeline companies are a step forward, if applied in the spirit in which they appear to be written, and further evidence that the sector as a whole will steadily become unbankable,” says McCully. “It is unfortunate, however, that HSBC’s vaguely worded corporate finance restrictions are significantly weaker than the broader 30% threshold for corporate finance used by BNP Paribas.”
Bangladesh, Indonesia, and Vietnam together they have nearly 80 gigawatts of new coal-fired power in pre-construction development. The loophole in HSBC’s coal power policy leaves the door open for the bank to support two of the world’s most controversial proposed coal plants, the Rampal and Payra plants in Bangladesh, which threaten the Sundarbans, the world’s largest mangrove forest and a World Heritage Site.
HSBC claims that its five-year exemption for coal in these countries is motivated by concern for “local humanitarian needs” and that the funds would be dependent upon independent analysis confirming that the relevant country “has no reasonable alternative to coal.”
“With the plummeting costs of renewables and battery storage all countries now have better options than new coal plants,” says McCully. “There is nothing ‘humanitarian’ about facilitating the construction of power plants that are polluting, expensive, and make people sick, instead of cheap, clean and healthy alternatives.”
“If HSBC actually follow independent analysis as they say they will, they would not fund any more coal plants. Our concern is that they they may use the advice of coal-industry linked analysts as an excuse to keep profiting from funding coal projects,” said McCully."
According to the 2018 fossil fuel report card, HSBC's previous energy policies earned the bank a D+ on tar sands, a D- on Arctic oil, and a C on coal power. This new policy announcement brings HSBC’s grades to a C- on tar sands and a C- on Arctic oil -- but keeps the bank at a C on coal power because of its Asian loophole.
RAN is one of many organizations pressing banks like HSBC to put in place policies restricting their financing for extreme fossil fuels like coal and tar sands. Today's policy announcement shows that the biggest bank in Europe — and the region’s top banker of extreme fossil fuels — recognizes that action on tar sands, Arctic oil and coal is a crucial litmus test for seriousness on climate change.