A new report by German nonprofit Urgewald reveals that global banks have provided over $385 billion in financing to the coal power industry over the past three years, despite international climate pledges to reduce reliance on coal. The funding flow actually increased in 2023, raising serious concerns about the sincerity of commitments made at COP26 in Glasgow, where governments and banks promised to decarbonize and phase down coal. Urgewald warns that such financing trends threaten global climate goals and make it seem “as if Glasgow never happened.”
Coal remains the most polluting energy source and currently generates over one-third of global electricity. Analysts warn that continued operations of existing coal plants alone could cause the world to overshoot the Paris Agreement’s 1.5°C target. While the construction of new coal projects is slowing, existing plants are still widely operational, especially in developing countries where many are relatively new and financially entangled. This makes early closures both politically and economically challenging.
Chinese banks led the coal financing race, providing nearly $250 billion between 2022 and 2024, while U.S. banks contributed just over $50 billion. Jefferies Financial Group’s coal portfolio grew by almost 400% during this period. In Europe, Deutsche Bank and Barclays were among the top financiers. Some banks, like Deutsche Bank, claim to have reduced coal-related emissions in their portfolios, but others have either declined comment or have recently relaxed earlier coal restrictions.
The resurgence of pro-coal policies in the U.S., particularly under former President Donald Trump, has added momentum to the industry. Trump recently signed multiple pro-coal measures. Meanwhile, just 24 of the world’s 99 largest banks have concrete plans to phase out coal financing by 2040, and many of these plans exclude steelmaking coal, which is more polluting than coal used for electricity generation.
Despite some signs of reduced lender interest in coal projects—such as a funding drop for Pembroke Resources’ Olive Downs project—industry leaders say the tide is turning back in their favor. As environmental groups raise alarms, financial institutions are being urged to treat coal financing with the urgency that climate science demands, especially as 2040 approaches fast as the deadline for safe coal phaseout.
Source: Leadership