On Tuesday, April 30, we wrote about a report from two environmental groups that named Bank of America as the biggest financier of companies that operate US coal-fired power plants and mine coal through the environmentally destructive practice of mountaintop removal. Citigroup and JPMorgan Chase were the second and third largest coal financiers, respectively. In the report, the Sierra Club and the Rainforest Action Network called on the banks to get out of the coal business, one of the biggest contributors to climate change. The green groups called coal a bad bet given the industry’s declining fortunes in the US. We asked Bank of America to comment on the report. Below is the bank’s response that spokeswoman Britney Sheehan provided Quartz.
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Quartz: According to the report, Bank of America’s coal-related financing fell nearly 50% in 2012 from the previous year. Why was that?
Bank of America: Many experts in the energy field will tell you that in the past couple of years, demand for coal in the US declined due to a shift towards less expensive natural gas. Bank of America’s financing of coal declined last year and our financing of renewables went up (we did $2 billion in renewables in 2012).
Quartz: What is the bank’s long-term view of opportunities to finance coal-related companies and projects?
Bank of America: Walking away from coal sounds easy, but it won’t solve the issue of climate change because it is not realistic. Coal comprises more than 30% of the energy used to generate electricity, and there are other fossil fuels that are cheap, abundant and providing a growing share of our energy needs. The fact is that fossil fuels, including coal, will be with us for many years, which is why Bank of America’s policy is focused on engagement with the energy sector on technology addressing the impacts of all energy sources, including coal and other fossil fuels, while being wholly committed to playing an expanding role in financing renewable and other forms of low-carbon energy over the long-term.
Quartz: What is Bank of America’s response to the report’s call for banks to phase out coal-related lending?
Bank of America: We can’t just turn off the funding for a significant part of our electricity mix over night. But more importantly, does society really want financial institutions making decisions on what fuels are used to power our country? Energy from wind and solar continue to grow, but supply only a small portion of our energy needs. That will continue to be the case over the short to medium term. We have to focus on both expanding renewables and other sources of low-carbon energy. Our activities are consistent with an “all of the above” policy strategy by the Obama administration to diversify and reduce the carbon intensity of the energy we all consume.
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Sheehan pointed out that in 2012 the bank underwrote, financed and advised on $4.5 billion worth of renewable energy and low-carbon deals versus $3.03 billion in coal-related business. The bank also launched a new $50 billion green lending program this year and expects to have financed $70 billion worth of environmental projects by 2023. That effort “is a floor not a ceiling,” the bank said. “It’s also the largest commitment of any financial institution. We are putting our capital and capabilities to work to help address climate change.”