Page 6 - AsiaElec Week 17
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HSBC takes decision to pull out of coal financing in Asia
ASIA
HSBC has finally called a halt to its backing of coal projects, telling shareholders that it was withdrawing from coal in Bangladesh, Indone- sia and Vietnam.
The decision strengthens its previous invest- ment policy, adopted in 2018, which exempted coal projects in the three Asian countries from its otherwise blanket ban on coal investment worldwide.
HSBC said in a statement to shareholders ahead of its AGM that it had previously allowed coal investment in those countries “to balance local humanitarian needs with the need to tran- sition to a low-carbon economy.”
However, the bank now said: “We have now amended our policy to remove this exception and will not finance any new coal-fired power plants anywhere globally.”
The bank also said it would say later in 2020 whether it would commit to net-zero emissions by 2050.
HSBC will now pull out of financing the planned Long Phu 1 coal-fired thermal power plant (TPP) in Vietnam. It has already with- drawn from Vietnam’s Vinh Tan 3 project.
The withdrawal from coal has built up momentum in recent months. Earlier in April, Japan Bank for International Cooperation (JBIC) said it would not provide any new loans for coal projects.
JBIC CEO Tadashi Maeda told Japanese media that coal investments took too long, while coal could lock countries into energy technology
that could be outdated by the time a decision was reached.
Maeda said that JBIC would not now lend to Vietnam’s 1,200-MW Vung Ang 2 project.
JBIC has lent $14bn to coal projects provid- ing 37.7 GW of coal capacity worldwide, accord- ing to data from Australian non-governmental organisation Market Forces.
Meanwhile, the Philippines’ Aya Corp. and Japan’s Sumitomo Mitsui Financial Group and Mizuho have all indicated this month that they will not back any more coal projects.
Globally, Royal Dutch Shell, Total and BP have all clarified their plans to increase their commitments to zero emissions.
Other investors coming out against coal include Citi and Verbund.
This all builds on the pre-COVID-19 decla- ration of BlackRock in January, which viewed climate risk as investment risk.
Coal is becoming an increasingly risky invest- ment asset for banks and investors that have been the biggest source of such financing in Southeast Asia.
“Coal-fired power generation finance is get- ting harder to get. As stranded asset risks in coal continue to rise, financial institutions are refin- ing their ESG policy frameworks and increas- ingly taking a commercial line aimed at avoiding losing even more capital – be it debt, equity or via insurance losses,” said Tim Buckley, director of energy finance studies at the Institute of Energy Economics and Financial Analysis (IEEFA).
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w w w . N E W S B A S E . c o m Week 17 29•April•2020
