Urgewald’s Global Coal Exit List (GCEL) is a powerful information tool and has played an influential role in shaping new policies by financial institutions on coal. GCEL is the world’s most comprehensive public database on the industry and makes all companies operating along the thermal coal value chain visible to the financial sector. Companies on the GCEL represent 90% of the world’s thermal coal production and the world’s coal-fired capacity. It offers key statistics on over 1,400 parent companies and over 1,800 subsidiaries operating along the thermal coal value chain.
Thermal coal companies with expansion plans surged in 2023 (+18%). Out of the 1,433 companies on the GCEL, only 71 companies have announced coal exit dates. Meanwhile, 40% of the GCEL companies are still developing new thermal coal mines, power and infrastructure projects with the backing of financial institutions. Yet, most of these institutions do not use their influence to condition their services to the end of new coal projects and require them to adopt an exit plan aligned with the goal of limiting global warming at 1.5ºC.
Financial institutions from around the world provide companies with the financial support needed to bring these projects to life. Today, among the 268 top financial institutions that have adopted a thermal coal policy, only 34% of them exclude at least some coal developers.
Adopting a policy that excludes companies with thermal coal expansion plans is a step forward; however, it is crucial to use the right definition to have a meaningful impact. Despite the availability of exhaustive definitions for companies with expansion plans, such as the one provided by the GCEL, some financial institutions persist in funding them with a less comprehensive definition.
Expanding the Problem
Despite coal plant closures in some parts of the world, the global coal plant fleet has seen a net growth of 186 GW since the Paris Agreement was signed. To put this into perspective: 186 GW are more than the operating coal plant fleets of Germany, Japan, South Korea and Indonesia combined.
According to the 2023 GCEL, companies are still planning to develop an additional 516 GW of new coal-fired capacity. If built, these projects would increase the world’s current installed coal-fired capacity by 25%. Two-thirds of this new capacity is planned in China, which has been ramping up its coal power plans since 2022. So, it comes as no surprise that 8 of the world’s top 10 coal plant developers are state-owned Chinese power corporations. What is surprising is that 96 US investors, led by BlackRock and Vanguard, account for 26% of institutional investments in China’s 8 top coal power developers. With US$ 1.68 billion, BlackRock is the world’s largest institutional investor in these companies, while Vanguard takes 4th place with US$ 909 million.
In the rest of the world, plans for new coal-fired capacity have seen a significant drop. Out of the 39 countries where new coal power plants are still in the pipeline, the largest capacity additions are planned in India (72 GW), Indonesia (21 GW), Vietnam (14 GW), Russia (12 GW) and Bangladesh (10 GW).
Adani: Coal Mining Expansion
The number one hotspot of the coal mining boom is India where coal production already reached a historic high of 893 million tons last year. According to the goal set by India’s Ministry of Coal and Mines, the country’s annual coal production would rise to 1.5 billion tons by 2030. To fulfill this plan, the government has auctioned off 92 new coal mining concessions since 2020; hundreds more are in the pipeline.
The world’s top 3 coal mine developers are Coal India with projects totaling 591 million tons of new coal production per year, China Energy Investment with 169 million tons and the Adani Group with 94 million tons.
While the first two companies are state-owned, the Adani Group belongs to the billionaire Gautam Adani whose business has profited time and again from his close ties to the Modi government. Today, Adani is the world’s largest private coal mine developer. The conglomerate owns coal mines in 3 countries, is a major trader and transporter of coal, operates a 16 GW coal plant fleet (with another 10 GW in the pipeline), and plans to build a huge US$ 4 billion coal-to- plastics facility in India. While one of the Adani Group’s 9 listed subsidiaries – Adani Green Energy – develops solar projects, the Group’s renewable investments are dwarfed by its enormous coal portfolio.
How Green Investments Fueled Coal Expansion
Until January 2023, when the short-seller Hindenburg Research published its 106-page report accusing the Adani Group of “brazen stock manipulation and accounting fraud”, Adani had no problem raising money through green bond issues and Adani subsidiaries were found in hundreds of ESG funds. Even investors who had divested other parts of the Adani Group due to its coal activities were still happy to invest in Adani Green Energy. The Hindenburg report as well as subsequent investigations, however, uncovered a pervasive pattern of intercompany lending, including transactions between Adani Green Energy and Group entities involved in coal expansion.
In the meantime, filings by the State Bank of India have shown that shares from Adani Green Energy and other Group subsidiaries were used as collateral in a credit facility for Adani’s enormous Carmichael coal mine in Australia. “Adani is a stark example of why responsible investors need to divest all subsidiaries of coal developers. It’s an illusion to believe that investments in the green arm of a company aren’t cross-subsidizing its other activities,” says Schuecking.
Failing the Phase-Out
While climate scientists, the United Nations and the International Energy Agency have time and again called for an accelerated phase-out of coal, the vast majority of coal companies are still pursuing business as usual. Out of 1,433 companies listed on the GCEL, only 71 companies – 5% of the total – have put an end date on their coal business lines. As Schuecking comments, “95% of the industry are still in denial and refuse to set a date for the closure of their coal assets.”
Out of the 71 companies that have announced a future coal exit, many have set phase-out dates that are far too late. To align with the 1.5°C goal, coal must be phased out by 2030 in OECD countries and by 2040 in the rest of the world. Berkshire Hathaway Energy, however, which operates 14 coal plants in the US, is not planning to retire its coal plants until 2049 – nineteen years too late. And South Korea’s KEPCO, which operates a coal plant fleet of over 36 GW, plans to keep its coal plants running until 2050. KEPCO is also still building 4 new coal-fired power plants in South Korea, Vietnam and Indonesia.
All in all, only 41 companies have adopted coal exit dates that could be considered Paris-aligned. But even companies that announce the “right” exit dates aren’t necessarily decarbonizing.
The Responsibility of the Finance Industry
The latest IPCC Assessment Report warns that “the choices and actions implemented in this decade will have impacts now and for thousands of years.” Financial institutions and regulators are among the key actors, whose choices and actions will determine which world we live in tomorrow.
Behind each and every company on the Global Coal Exit List, there are banks, investors and insurers. Without their support, these companies could not operate. Many financial institutions justify these relationships by claiming that they want to help their clients transition. Yet, the vast majority of companies on the Global Coal Exit List are not transitioning. Stopping investment in companies that are propelling us towards a break-down of our planet’s climate system needs to become the new normal. Otherwise, we will miss the exit on coal.
The financial sector is not using its potential to drive a responsible exit from the sector. Although 89 financial institutions have committed to exiting coal by the above-mentioned deadlines, only 24 strictly require that their remaining portfolio clients adopt a coal exit plan.
Today, over 270 financial institutions use the GCEL to screen their portfolio and extract specific data points. Financial institutions need to go further and use the GCEL as a basis for shaping their policies, as more than 50 financial institutions have already done. Already endorsed by the International Financial Corporation and used by regulators, the GCEL is also an instrument for mitigating financial risks associated with coal and ensuring the transparency of financial institutions’ climate communications to prevent greenwashing.
About the Global Coal Exit List
The GCEL was first launched in 2017 and is updated each fall. It covers all coal developers, the largest coal plant operators and thermal coal miners as well as all companies that generate over 10% of their power generation or revenues from coal. Investors representing over US$ 19 trillion in assets are currently using one or more of the GCEL’s 3 divestment criteria to exclude coal companies from their portfolios.