Source: Institute for Energy Economics and Financial Analysis
Germany’s KfW Group is pulling out of loans for new coal projects, joining other European development banks that have already followed orders of their governments to minimize exposure to the world’s most widely used power-station fuel.
KfW will no longer finance the exploration or mining of coal or lend to coal power plant projects, the lender said Monday as it updated its investment code from four years ago. The firm hasn’t made any new investments in coal projects since then and holds less than 2 billion euros ($2.26 billion) in outstanding loans in the fuel.
The move to formally exclude coal in Frankfurt-based KfW’s business complies with the German government’s decision this year to adopt strict sustainable strategies in its financial dealings. The decision will impact federal investments such as pension fund holdings in foreign utilities with coal assets. The government is also mulling selling green sovereign bonds.
European development lenders began to taper coal investments earlier this decade, but many have been slow to declare an official end to the practice. At the same time, coal remains the dominant fuel in power generation despite the world searching for cleaner alternatives, BP’s Annual Statistical Review of World Energy showed last month. The fuel accounted for almost 40% of electricity last year, which has been roughly constant for 20 years.
Leading corporate lenders are also winding down investments in coal. Some 21 banks including Commerzbank AG and Société Générale SA have declared that they will forgo direct investments in the fuel, according to a February report of monitoring website Banktrack.