Over 67 organizations urge the world's leading banks to cease financial backing for new metallurgical coal ventures. Led by BankTrack and Reclaim Finance, they advocate for an end to standard practices, highlighting the detrimental climate impact and urging a swift transition to sustainable steel production methods.
A coalition of 67 organizations, spearheaded by BankTrack and Reclaim Finance, is challenging 50 major banks globally to abandon financial support for new metallurgical coal production and expansions. This collective push aims to disrupt prevalent banking practices that facilitate the steel industry's reliance on metallurgical coal, a significant contributor to climate change.
Metallurgical coal constitutes 14% of the global coal market, primarily fueling steel production through its conversion into coke. This material plays a vital role in primary steelmaking but has raised concerns due to its environmental impact.
Julia Hovenier of BankTrack emphasized the urgency of transitioning away from metallurgical coal, citing its adverse implications for both the steel industry and climate change. Financial institutions, she argues, must adopt policies to curb the expansion of metallurgical coal to prevent exacerbating the climate crisis and potential stranded assets.
While several banks have policies against thermal coal, only nine have taken a stance against metallurgical coal. Shockingly, these major banks have collectively provided $557 billion to the top 50 developers in the metallurgical coal sector since 2016.
The International Energy Agency's projections indicate that current mining capacities suffice for coking coal demand until 2050. However, plans to expand production to 406 metric tons per year, over a third of 2021's total consumption, pose sustainability challenges, as reported by the Sierra Club.
The open letter calls on banks to discontinue financial services for metallurgical coal projects, including mines' development or expansion. It insists on a commitment to cease services to companies without clear plans aligned with climate goals for closure and sustainable transition, emphasizing the criticality of moving away from coal for emissions reduction.
The mounting pressure from a coalition of organizations on global banks reflects a growing consensus on the urgent need to pivot away from metallurgical coal. This concerted effort aims to compel financial institutions to align their practices with climate goals and drive the steel industry towards sustainable and low-carbon alternatives.