Coal finance declining, says IEEFA

• 4 years ago (2020-04-22)
• David Flin

Coal 277 Renewables 753

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The Institute for Energy Economics and Financial Analysis (IEEFA) has reported that the credit appeal of coal-fired power plants seems to be in terminal decline. After a decade of deflation of renewable energy costs approaching 10 per cent annually and an extended global economic lockdown due to the coronavirus pandemic, financial institutions have been accelerating their exit from financing coal-fired power plants.

Japan’s Sumitomo Mitsui Banking Corporation (SMBC) and the Mizuho Financial Group both announced new coal financing restriction policies last week, as did ABSA bank of South Africa. Citi, from the USA, has also moved much closer to exiting from coal financing.

President Moon Jae-in of South Korea made significant waves with his Green New Deal to cease coal financing globally, while Ayala Corporation of the Philippines and Verbund AG of Austria have both recently announced their exit from coal. Verbund said: “The future belongs to renewable energy.”

When combined with Shell, Total, and BP’s recent commitments to moving into zero emissions electricity generation, these are significant moves building on the momentum of global financial institutions accelerating exit from financing coal projects.

The rate of globally significant banks, insurers and asset managers/owners announcing tighter coal restriction policies has increased by 50 per cent to date in 2020 relative to last year.

IEEFA said that it expects the deflation of renewable energy costs to continue for the coming decade, accelerating the exit from coal.