One of Australia’s biggest banks has announced it will divest from thermal coal by 2030 in what is being hailed as “another nail in the coffin” for the industry.
Westpac has committed to exiting thermal coal mining by 2030 and will not establish new relationships with thermal coal customers, limiting support for the industry to existing basins.
The bank has also set an emissions intensity target for power generation lending of 0.18 tonnes of CO2 per megawatt-hour generated by 2030, effectively making it impossible to finance new coal and gas power plants.
“Westpac’s policy is another nail in the coffin of the thermal coal industry and a stark warning to a federal government trying to leverage the COVID-19 pandemic to give the fossil fuel industry a leg up,” said Market Forces executive director Julien Vincent. “This plan shows it won’t be happening with Westpac’s cooperation.”
Market Forces hopes the plan will reverse a “disturbing trend” in Westpac’s lending activity that has seen it loan $5.4 billion to coal, oil and gas projects since 2016. Since committing to the Paris Climate Agreement, Westpac has loaned 2.7 times as much money to fossil fuels as to renewable energy.
“Westpac’s policy comes out as we contemplate what sort of future we want for our economy,” Mr Vincent said. “With the frailties of the coal, oil and gas sectors laid bare by the economic impacts of COVID-19, and the horror summer of bushfires still fresh in our minds, the time has come to move on from polluting fossil fuels once and for all.”
Westpac has also indicated new financing for oil and gas will need to be compatible with the Paris Agreement of limiting global warming to 1.5 degree Celsius, requiring energy from gas to fall by 25 per cent and oil by 37 per cent from a 2010 baseline.
“Last year, Commonwealth Bank was the first to commit to be out of thermal coal by 2030, along with all three of our general insurers,” Mr Vincent said. “Now, anyone trying to operate a coal mine or power station in Australia by the end of this decade will need to do it without Westpac as well.”