Receive our newsletter – data, insights and analysis delivered to you
  1. Finance
13 September 2021updated 05 Nov 2021 9:31am

Weekly data: US institutional investors hold key to global coal phase-out

US banks, insurers and asset managers are not divesting from overseas coal assets fast enough, research from a German non-profit suggests.

By Mirela Petkova

American institutional investors are responsible for most of the international investments in the overseas coal industry, shows Energy Monitor’s Weekly data based on research from German non-profit environmental and human rights group Urgewald.

China is the largest public financier of coal plants across the world. The top ten underwriters of the global coal industry are all Chinese financial institutions such as the Industrial and Commercial Bank of China, and the Bank of China.

Yet, global coal financing is sustained by a myriad of actors outside of China. There is only one Chinese institution in the top ten lenders to coal projects and eight out of the top ten investors are American institutional investors. Investment management companies such as Vanguard, BlackRock and Capital Group lead with a combined investment of more than $208bn in coal projects around the world.

Overall, 87% of total – public and private combined – financing for overseas coal projects comes from non-Chinese entities. While the G7 has pledged to end international public financing of coal by the end of 2021, it will remain challenging to meet climate targets if large institutional investors do not divest.

[Keep up with Energy Monitor: Subscribe to our weekly newsletter] 

Content from our partners
How investing in Scotland can help to drive a low-carbon future
Beyond smart: How the grid-interactive building will form an essential component of the new energy system
The power of gaming: Inside Abu Dhabi’s winning esports ecosystem

According to Boston University Global Development Policy Center, public finance only accounts for 3.4% of the capital behind the global coal fleet outside of the G7 and China. In other words, the private sector is the engine behind coal plants in much of the world.

Coal loading in trucks in an open-pit mine. (Photo by Parilov/Shutterstock)

Considerable shifts in investment patterns are crucial in all scenarios that seek to limit global warming to 1.5°C, says the Intergovernmental Panel on Climate Change in its Sixth Assessment Report launched earlier this year. In particular, investments in coal need to stop by 2030. Investment portfolios are not aligned with the emissions reduction goals needed to keep global warming at bay. If there is to be a genuine coal phase-out, divestment will have to happen much faster.

Topics in this article: ,
NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. Switch on the week and Switch it off again with our round-up, sent Mondays and Fridays
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU