South Africa’s Standard Bank Will Finance Coal Plants in Africa

  • Standard Bank has announced that coal-fired power plants must meet maximum emission and plant size parameters that are linked to the level of development of the country in question, to be eligible for finance.
  • Only projects in International Development Association (IDA) countries will be eligible – most countries in Africa are IDA countries
  • The bank will also finance projects below certain emissions thresholds elsewhere in the world.

Standard Bank’s coal-powered finance policy was revealed this week. In statement the bank said:

“Coal-fired power has historically been an important source of energy supply in several countries in Africa including South Africa, and the Paris Agreement recognises that emission reduction will take longer for developing countries. There is, therefore, a clear requirement for the bank in its financing of power projects, to balance the need for broad access to electricity, with the choice of technology used to mitigate the risks of climate change as embodied in the Paris Agreement.”

The bank stressed that to be eligible for direct finance; coal-fired power plants must meet maximum emission and plant size parameters that are linked to the level of development of the country in question. Read their full policy document here.

Plants that exceed certain emissions levels and installed capacity will not be eligible for financing under any circumstances, while in other cases only projects in International Development Association (IDA) countries will be eligible, and below certain emissions thresholds, coal-fired plant projects can be funded anywhere.

IDA countries suffer from the lowest gross national income, have a troubled creditworthiness, or are from the lowest per capita income. Standard Bank lists the countries as Benin, Burkina Faso, Burundi, Cameroon, Cape Verde, CAR, Chad, Comoros, DRC, Republic of Congo, Cote d’Ivoire, Eritrea, Ethiopia, The Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, South Sudan, Sudan, Tanzania, Togo, Uganda, Zambia and Zimbabwe.

Standard bank specifies that coal fired power plants with emissions between 750 and 850 g CO2/kWh qualify for finance. Read: There is no such thing as clean coal

Standard banks latest announcement bucks the trend internationally where the smart money is jumping ship. Read more  

In April this year at Standard Bank’s Annual General Meeting, climate-conscious shareholders compelled the bank to adopt and publicly disclose a policy on lending to coal-fired power projects and coal mining operations. Resolution 10.2 received 55% of shareholder votes, and is therefore binding on the company.

This is the first time that a South African bank – or any listed South African company – has faced a shareholder resolution on a climate-related issue. Standard Bank’s board had recommended that shareholders vote against it.  Read more

The Industrial & Commercial Bank of China Ltd is Standard Banks biggest shareholder with 20.1%. Under the Chinese Belt and Road Initiative, 68 Gigawatts of new coal generation has been financially supported to date. Read more

Author: Bryan Groenendaal

 

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