The “Carbon Principles” (Another Bank Failure?)

In February 2008 three major US banks, Citigroup, JPMorgan Chase and Morgan Stanley, (who, as with all American banks, have come upon troubled times) set out a list of principles intended to affect financing of coal-fired electric generating plants.

“The Carbon Principles,” in an eight-page document, reflect the intense concern felt by the entire financial industry for their investments in coal and, in fact, all greenhouse-gas intensive industries.

In April, Bank of American joined the group, followed by Credit Suisse in June and Wells Fargo in July

A press release in San Francisco called “Carbon Principles another Nail in Coal’s Coffin.”
That might have been true if the principles outlined were seriously followed. It would mean careful scrutiny of the environmental impact of all planned, public or private, power plants of over 200MW for new coal-fired capacity or for expansion of existing coal-fired capacity.

In fact, what the “principles” set out to do was to protect the banks, not the public. They would attempt to make sure that investments in power plants utilizing or to utilize fossil or other carbon-based fuels would not run afoul of new or anticipated laws promoting clean energy.
In the words of RAN (Rainforest Action Network),”The proof is in the pollution. If this policy prevents the financing of new coal, it will be productive.”

Unfortunately that was not its function. More unfortunate is that there was no provision for any enforcement, penalty or even sanctions for failure to protect the public interest.

“Calling them ‘Carbon Principles’ is an overstatement,” according to RAN. “A serious climate change policy would commit banks to emissions reductions in their financing and extend beyond coal into other carbon intensive sectors such as coal mining and the oil and transportation industries.”

We don’t usually need to quote other sources, as we are starting out on our own second 100 years, but in this case we felt that the argument could not have been stated better and more to the point. Which is = we’ve got a long road to travel to energy sanity.