JP Morgan Chase, one of the largest financial banks in the U.S., says it will divest most of its coal assets, leaving in tact investments in coal-powered plants with “ultra-supercritical” techniques for capturing carbon emissions.
The 200-year-old bank has decided to discontinue its investments in coal mines around the world, as well as divest coal assets in the wealthy countries of the Organization for Economic Co-operation and Development, JPMorgan officials wrote on the company’s website.
The bank said it would decide on a “case-by-case basis” which coal plants are successfully capturing carbon-dioxide emissions.
The National Mining Association (NMA), which represents several of the country’s largest coal producers, called the changes hardly heroic, especially when considering the coal market’s downturn.
“The bank hedges its bets on financing projects in developing countries, because, not surprisingly, that’s where the growth is and will be,” the group’s spokesman Luke Popovich wrote in an e-mail Monday.
JP Morgan’s war on coal comes at a tough time for what was once considered the country’s most important form of energy.
One of the coal producers the NMA represents, Missouri-based Arch Coal, filed for bankruptcy in January, claiming it has $650 million in the bank, along with the $275 million it acquired via bankruptcy loans. It assured investors that the money would allow the company to continue mining for the foreseeable future.
The pinch in the coal markets hit Arch’s debt hard. The company’s debt has gone for less than a penny on the dollar, Arch company chief financial officer John Drexler claimed in the Chapter 11 filing.
Coal is getting bludgeoned by cheap natural gas, stricter governmental regulations and dwindling global demand. Market capitalization of U.S. coal miners has plummeted since 2011, going from $74.4 billion to less than $7 billion.
Even with the market doldrums, the U.S. still receives 22 percent of its energy from coal.
Saudi’s oil minister Ali Al-Naimi made similar overtures toward capturing carbon emissions, telling an audience of oil executives in February that instead of pushing to replace fossil fuels entirely, oil producers should look at carbon capturing technologies to help clean up the environment.
He added that the entire oil industry must work together to curb carbon dioxide emissions, but it must do it in a responsible manner.
“We must continue to work together and we must stick together if we want to achieve our common goal of supplying energy for the betterment of the world and humankind,” Al-Naimi concluded.
JPMorgan, however, plans on ratcheting down in the “medium-term” its exposure to businesses getting the bulk of their assets from coal.
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