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Dirty Money

PLATFORM releases RBS coal finance report to coincide with start of RBS-sponsored Climate Week
by platform london on 21 March 2011

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Transcript of Dirty Money

All over the world, diverse groups from community activists to schoolchildren, small businesses to faith-based networks, are starting to take action on climate change. Big business is following suit, but often with tactics that bring their integrity into question. Climate change is being used to create a new kind of brand identity, without any of the fundamental changes needed to tackle the root causes of the problem itself –- the use of fossil fuels. This report takes the case of the Royal Bank of Scotland, an international bank with interests across the fossil fuel sector that is promoting itself as a genuine actor in climate change efforts. In the years from 2008 to 2010 inclusive, RBS was involved in providing finance worth almost €8 billion to companies listed in the world’s 20 biggest operators of coal mines and generators of coal-based electricity. All international banks were ranked according to the amount of finance they had been involved in providing to the 20 biggest coal mining operators and the 20 biggest generators of coal-based electricity. For the 20 largest coal companies, RBS was ranked 8th out of 35, with HSBC ranking 10th, and Barclays 29th. For the 20 largest coal-based electricity generators, RBS was ranked 3rd, with Barclays coming 4th and HSBC 11th out of 69. Like who for example? Hargreaves Services owns the Maltby coal mine in South Yorkshire which supplies Drax power station, the single biggest carbon emitter in the UK. Hargreaves is pushing ahead plans to reopen Tower Colliery in South Wales, giving the company access to seven million tonnes of coal reserves via opencast mining. Peabody Energy represented 4% of global coal production in 2009. According to Fred Palmer, senior vice president of government relations for the company, Peabody is “100% coal. More coal. Everywhere. All the time.” Fred Palmer is Peabody Energy’s main lobbyist of US Congress where he is leading energy sector efforts to water down the US Environmental Protection Agency’s proposed carbon emissions policies. Palmer recently commented: “There are certain realities: coal is going to grow; coal is going to be a mainstay fuel because it's the fuel that the world has…This is not a science discussion.” Head to Head with RBS “Across the whole of RBS, approximately 3.6% of our lending (measured by total credit risk assets) is committed to the oil and gas and electricity sectors combined.” This figure may appear small expressed as a percentage in comparison to the entirety of the banks risk assets from personal bank accounts and other business finance, but £15 billion represents an enormous ‘real world’ impact when it is being channelled to the fossil fuel sector. This finance plays a key role in the extraction and combustion of fossil fuels. Without this finance from RBS and other international banks, the projects and companies would not be able to operate at their current capacity. “Since 2006, we have provided more finance to wind power projects than any other type of energy project.” Finance for wind power does not offset or neutralise finance to coal power. Wind turbines alone do not deal with climate change - there needs to be a concurrent move away from fossil fuel deployment. According to research carried out by Brant Olson of the Rainforest Action Network using a Bloomberg terminal, if we move the focus away from project finance, the figures tell a very different story. Since the bail-out, less than 1% of the US$15 billion RBS raised for the energy sector went to alternative energy - just US$83 million. “Since the UK Government’s recapitalisation of RBS in 2008, our lending to the oil and gas and electricity sectors globally (measured by credit risk assets) has fallen by £9.1 billion and £11.2 billion respectively, and makes up a smaller proportion of our lending now than it did then.” During the first six months since the initial bail-out in October 2008, RBS was recapitalised with £33 billion of tax-payers’ money; and according to the Guardian, during that time it was involved in providing finance £10 billion worth of finance to deals in the oil, gas and coal sector. This money was not spent in the interest of the public good. According to the Sunday Herlad, between October 2008 and August 2010, RBS was involved in providing finance of over £13 billion to oil and gas deals, while the UK taxpayer continues to face more and more cuts in basic frontline services. £33 billion is almost equivalent to the total devolved spending for Scotland, and a third of the entire NHS budget for 2009/10. The taxpayers’ money used to bail out the banks could have supported the welfare services now being decimated; the bailed out banks have a debt of obligation to invest in socially useful rather than socially harmful projects. ‘Dirty Money’ recommends that RBS: Recognises that its biggest impact on climate change is through the nature of the companies and projects to whom it is providing finance. Calculates and discloses the carbon emissions embedded in its provision of finance to fossil fuel companies, and adopt a strategy to bring about a year on year reduction of those embedded emissions. Designs and adopts sectoral polices for companies or projects operating in particularly problematic fossil fuel sectors, such as tar sands extraction in Canada, drilling for oil in the Arctic and the provision of loans to support new coal operations. Dirty Money: Corporate greenwash and RBS coal finance The data: RBS coal finance includes on the bail outs on fossil fuels on wind power www.platformlondon.org/dm.pdf
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