National Australia Bank to stop financing new coal power plants
The National Australia Bank (NAB) is set to become the first major Australian bank to stop financing new thermal coal power plants, sending a strong signal to the Australian financial sector about the future of coal in the country.
On Thursday, the bank issued a statement explaining that “NAB has an important role to play in the orderly transition to a low carbon economy”.
“An orderly approach to the low carbon transition is critical to ensure Australians can continue to have access to secure reliable and affordable energy and support our economy”.
Although the bank stated that it will honour the existing financing agreements with ongoing coal projects, it pledged that no new deals will be signed and that the bank will boost its support for renewable energy projects.
“We have seen tremendous growth in clean energy across our loan book and our customers are continually telling us that they want more ways to get involved in the market”, NAB said.
In November, Commonwealth Bank told its shareholders to expect a decline of financial support for the coal industry, indicating that the bank is unlikely to act as a lender for future large coal projects.
Jonathan Moylan, a Greenpeace campaigner, welcomed the news by saying: “This is a market-leading position for an Australian bank and is even stronger than the position taken by Commonwealth Bank last month because it is formal policy”.
Julien Vincent, Executive Director of environmental finance advocates Market Forces, commented: “NAB has lifted the bar above its competitors by becoming the first major bank to end lending to all new thermal coal mining”.
“This policy means NAB joins the ranks of dozens of banks and insurance companies globally that are withdrawing from this most climate-polluting of industries”, he added.
A few weeks ago, the Australian Prudential Regulation Authority (Apra) warned banks, lenders, and insurers that a lack of assessment of climate risks has already started affecting the global economy.
It explained that if the Australian financial sector does not further the incorporation of climate risks into its investment strategies, Apra will consider establishing a binding regulatory framework.
In a speech, Apra’s Geoff Summerhayes said: “Whether due to regulatory action or, more likely, pressure from investors and consumers, Australia’s financial sector can expect to see more emphasis on discourse around climate risk exposure and management”.