More than 67 organizations are calling on the world’s largest banks to end financial support for new metallurgical coal production and expansion. Led by BankTrack and Reclaim Finance, an open letter was sent to 50 banks asking them to end “business as usual” practices.
Metallurgical coal represents 14 percent of the world’s coal and is predominately used for steelmaking in which it’s refined into coke, “a material combined with iron ore in a blast furnace to produce primary steel,” according to the Sierra Club.
“The green steel transition is already underway, but financial institutions continue to invest in metallurgical coal—a dead end for the global steel industry and for the climate,” Julia Hovenier, Banks and Steel campaigner at BankTrack, said. “To prevent stranded assets and avoid deepening the climate emergency with their dollars, banks must swiftly adopt policies that halt the expansion of metallurgical coal.”
While many financial institutions have adopted policies against thermal coal, only nine have policies against metallurgical coal, the Sierra Club reported. From 2016 to today financial support from the world’s biggest banks in a sum of $557 billion was given to the 50 biggest developers in the metallurgical coal sector. The International Energy Agency said in 2021 that “existing mines were sufficient to meet coking coal demand through 2050,” but there are current plans to up production to capacities of 406 Mt per year, which is more than a third of total consumption in 2021, the Sierra Club reported.
“Coal is by far the greatest source of greenhouse gas emissions causing the climate crisis,
responsible for 40 percent of emitted GHG in 2021,” the open letter said. “Due to its reliance on coal, the steel sector emits 7 percent of global GHG and 11 percent of CO2. Moreover, the use of coal comes with broad threats to human health. To bring down these emissions, it is essential that the steel industry redresses its reliance on met coal and uses existing decarbonization solutions.”
The open letter specifically calls on banks to:
- Immediately end all dedicated financial services, including advisory services to
metallurgical coal projects. This includes the development of new metallurgical coal
mines; the expansion of existing ones, and all related infrastructure.
- Committing to no longer provide financial services to companies that have plans to
develop or are developing metallurgical coal projects. This includes no longer
providing services to companies that do not have a detailed asset-by-asset and
mine-by-mine closure (and not selling) timetable aligned with a 1.5°C scenario, and a just and sustainable transition and decommissioning plan for workers, local communities, and the environment.
“We thank you in advance for your bankʼs willingness to put an end to the use of all coal and for
endorsing your partners in the steel industry in their path towards carbon-neutrality through
advisory and the provision of transition finance,” the open letter said.
To read the open letter click here.