ANZ bank has pledged not to finance traditional coalmining projects and to provide at least $10bn in funding for renewable energy, reforestation and energy efficiency.
In the most significant steps yet by one of Australia’s big four banks on climate change, ANZ said its new policies would help a “gradual and orderly transition” from fossil fuels to clean energy such as solar and wind.
The bank has ruled out funding “conventional coal-fired power plants” that do not use commercially proven technologies that significantly reduce carbon dioxide emissions below 800 kilograms per megawatt hour.
The $10bn commitment, over five years, will fund a range of low-carbon initiatives such as renewables, low-emissions transport, reforestation and carbon capture and storage (CCS).
CCS has been hailed by the coal industry as a way to prolong the viability of fossil fuels. However, the technology, which captures emissions and stores them underground, is very much in its infancy, with only one commercially operational plant – in Canada – fitted with CCS.
In its climate statement, ANZ said: “We understand some of our stakeholders view our financing of fossil fuel industries as a material risk and in direct conflict with our stated position on the need to reduce greenhouse gas emissions.
“Today, around 40% of the world’s electricity comes from coal-fired power stations and coal remains the cheapest source of fuel. We therefore consider that decarbonisation of the economy must be managed responsibly and over time.”
ANZ has come under fire from climate activists due to its position as Australia’s largest lender to fossil fuel projects, backing the controversial Maules Creek mine in New South Wales.
But ANZ said it was committed to the internationally agreed target of limiting global warming to 2C above pre-industrial times. The bank said it would transparently report its progress on climate and set targets to reduce its own emissions.
Australia three other largest banks – Westpac, Commonwealth Bank and NAB – are all signed up to sustainability commitments for their lending. But environmental groups have pressed them to do more by ruling out investment in coal projects, as overseas banks have done with Adani’s huge Carmichael mine in Queensland.
Last week the governor of the Bank of England, Mark Carney, warned insurers of a potential financial crisis due to exposure to climate change risks.
“The challenges currently posed by climate change pale in significance compared with what might come,” Carney said. “The far-sighted amongst you are anticipating broader global impacts on property, migration and political stability, as well as food and water security. So why isn’t more being done to address it?”
The chief executive of the Australian-based Investor Group on Climate Change, Emma Herd, welcomed ANZ’s statement.
“There’s been a lot of work going on behind the scenes over the last 12 to 18 months on how to measure carbon risk, and this is the first time we’ve seen an Australian bank come out so specifically on the measures they will take,” she said.
“We are also seeing ANZ factor the 2C target into their business practice, to articulate what it means for them. AGL and BHP have also done this recently. We are seeing a consensus emerge around that 2C target.”
Herd said the investment in clean energy and related measures was “very significant”.
“The dollar commitment is significant but the signal it sends is more important, especially when you consider that this applies to ANZ’s operations in Asia,” she said. “Australia has a carbon-intensive economy and companies need to have a plan on how to manage their carbon risk.”
According to University College London, 90% of Australia’s known coal reserves must be left unburned to keep the world on track to avoid warming above 2C. Analysis released by AGL last year showed that 75% of Australia’s ageing coal-fired power stations were operating beyond their “useful life” but that it was too expensive to shut them down.
This article was written by Oliver Milman, for theguardian.com on Tuesday 6th October 2015 02.48 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010