Big Coal Losing Momentum in the U.S.
Poor coal. For so long, it has gotten away with being the largest contributor (41 percent) to global CO2 emissions from energy use, a widespread public health hazard by virtue of lead, mercury and other pollutants, the source of black lung disease, and now we can add deforestation to its achievements. “Coal will be coal,” they said. “Isn’t it great that it’s cheap and abundant?” Coal claims that it’s now clean and has offered to change its ways by burying its carbon instead of spewing it all over the atmosphere, but its persecutors have obtained restraining orders and are bent on keeping it out of the house.
According to Coal Moratorium Now! and the Rainforest Action Network (RAN), fifty-nine coal plants (of more than 150 proposed between 2000 and 2006) were cancelled or shelved in 2007. Carbon emissions played a role in at least 15 cancellations, and coal plants disappeared entirely from some utilities’ long-range plans due to increasing regulatory scrutiny of long-range integrated resource plans. In some states, regulators are starting to favor utility-scale renewables over coal. Interestingly, more plants have been abandoned by their sponsors than rejected outright by regulators, courts or local authorities. Rising construction costs, insufficient financing or lack of subsidies and even lower demand estimates were contributing factors along with climate change.
At Trillium Asset Management Corporation, it’s always been our policy not to invest in mining companies, and we try to avoid holding electric power companies that favor coal over cleaner sources of energy. But fortunately our hands are not tied when it comes to advocacy. As my colleague Lauren McLean writes about in this issue (see p. 10), we’ve used our voice at Alliant Energy to promote greater development of energy efficiency incentives. We’re also on Bank of America‘s case. The Ceres member has received a lot of praise for being the first bank to adopt an “intensity” (reduction per unit) GHG target for its energy and utility lending portfolio; its goal is to realize a 7 percent decrease by 2008 from a 2004 benchmark. It is on its way to meeting that goal. So what’s wrong with this picture? It’s simple. Reductions per unit are all well and good, unless overall (“absolute”) emissions are going up – as Bank of America’s did by 11 percent between 2005 and 2007.
The company has refused to answer shareholders’ questions as to why this is. Could it have something to do with RAN’s research identifying the Bank as one of the top financiers of coal power plants? We’re starting to wonder if the kudos Bank of America is getting for its intensity reduction goals isn’t a little like patting a dieter on the back for reducing calories per meal even as he eats so many meals that he’s put on 11 percent more pounds since 2005.
This metaphorical epiphany was one of the motives behind our shareholder resolution calling on the Bank to embrace a moratorium on financing coal-fired power plants and coal mining by means of mountain top removal (MTR). A moratorium on building new coal plants is a radical idea that’s increasingly supported by non-radicals, such as the U.S. public. Seventy-five percent of American adults would support a five-year moratorium on new coal plants if funding for renewable alternatives was increased and efficiency standards were tightened.1
Mountain top removal is a double whammy on the climate front. The method clear-cuts forests and blasts away mountain tops to extract coal. The rubble is dumped in the valleys below, filling streams and destroying water resources. Between 1992 and 2012, the US Environmental Protection Agency estimates that MTR will have destroyed approximately 7 percent of Appalachian forests in coal mining regions studied.
Over 110 coal-fired electrical generating plants and synfuels plants are currently under construction or in the planning process. In addition to bearing their share of ethical responsibility for the disaster that is coal, those that finance it assume additional financial risk due to rising construction costs for coal plants and the eventual attachment of a price tag for emitting carbon (which Bank of America recently estimated at $20-$40 a ton in the absence of federal regulation).
Coal enthusiasts insist that capturing and storing carbon underground will solve the GHG problem, but as a new report from the Interfaith Center on Corporate Responsibility observes, these technologies are untested at actual plant-scale sizes.2
Bank of America successfully petitioned the Securities and Exchange Commission to exclude our proposal from the proxy ballot. However, Citigroup’s shareholders will vote on a similar resolution filed by Boston Common Asset Management. Vote Yes on Proposal 9. Coal is a bad investment.
1. “A Post Fossi-Fuel America: Are Americans Ready to Make the Shift?” opinion survey conducted by Opinion Research Corporation, October 18, 2007.
2. ICCR and Synapse Energy Economics, Inc., The Risks Of Investing In New Coal-Fired Generating Facilities, p. 29.