As Coal’s Future Grows Murkier, Banks Pull Financing
America’s coal industry is now facing another dark hour, but this time there are few financiers willing to save it, The New York Times reported yesterday. JPMorgan Chase announced two weeks ago that it would no longer finance new coal-fired power plants in the U.S. or other wealthy nations. The retreat follows similar announcements by Bank of America, Citigroup and Morgan Stanley that they are, in one way or another, backing away from coal. While coal has been declining over the last several years, Wall Street’s broad retreat is an ominous sign for the industry. Coal, like railroads, steel and other engines of the nation’s industrial expansion in the 19th and early 20th centuries, helped drive Wall Street’s profits for generations. More than a century later, the coal industry is in a free fall and the banks are pulling away. Some banks say they are trying to do their part to curtail climate change by moving away from coal projects and financing ventures that produce less carbon. But bankers also say there is a more basic reason for the shift: Lending to coal companies is too risky and could ultimately prove unprofitable. Coal companies are being squeezed by competition from less expensive energy sources like natural gas and by stiffer regulations — pressures that show no signs of letting up.
