Banks Channelled $385 Billion into the Coal Industry Since COP26

July 13, 2025 stocks24

In the past three years, global banks have invested over $385 billion in the coal power industry, with a notable increase in annual investments last year compared to 2023, according to an analysis by a coalition of nonprofits.

At the COP26 climate conference in Glasgow in 2021, almost 200 nations pledged to reduce coal usage, and many of the world’s largest commercial banks committed to decarbonizing their investment portfolios. However, four years later, these commitments have yet to make a meaningful impact on financial flows.

“It feels as if Glasgow never happened,” stated Katrin Ganswindt, financial research director at Urgewald, a German nonprofit that contributed to the analysis.

Coal, the most polluting energy source globally, accounts for over one-third of the world’s electricity generation, as reported by the International Energy Agency. Continuing operations of existing coal plants could lead to exceeding the Paris Agreement target of limiting global warming to 1.5°C.

While the growth of new coal projects is slowing, the current fleet of coal plants continues to operate, as detailed by Urgewald.

“The sooner we reduce emissions, the better our chances of avoiding a breakdown of our climate system,” Ganswindt stressed.

Prematurely shutting down coal plants poses challenges, particularly in developing countries where many plants are relatively new. This transition requires the availability of renewable energy sources as well as financial compensation for stakeholders. Current efforts to close plants ahead of schedule face significant delays and numerous hurdles, both political and financial.

The potential return of Donald Trump to the White House has had a positive influence on the coal industry. Earlier this year, he initiated several policies aimed at increasing coal consumption and production in the U.S.

Chinese financial institutions are leading in coal-related financing, having committed nearly $250 billion to the sector from 2022 to 2024, according to Urgewald. U.S. banks follow with a contribution of slightly over $50 billion, primarily from Bank of America Corp., JPMorgan Chase & Co., and Citigroup Inc.

Jefferies Financial Group Inc., based in New York, has witnessed the fastest growth in its coal portfolio, with funding increasing by nearly 400% over the past three years, according to Urgewald. In Europe, Barclays Plc and Deutsche Bank AG provided the most financing for coal during the same timeframe.

A representative from Deutsche Bank asserted that the bank has reduced its involvement in carbon-intensive sectors over the past decade, achieving a 42% decrease in emissions associated with its lending and investments in the coal mining sector by 2024, compared to 2021 levels. A Bank of America representative acknowledged that the company serves a diverse clientele across the energy sector.

Representatives from JPMorgan and Citigroup declined to comment, while those from Jefferies and Barclays have not yet responded to inquiries.

After an initial spike in efforts to minimize financing, some banks have relaxed their coal financing restrictions in recent years. In late 2023, Bank of America changed its policy regarding financing new thermal coal mines, replacing it with a requirement for enhanced due diligence. Last year, Macquarie Group Ltd., based in Sydney, eased its financing criteria for coal used in steel production.

In total, only 24 out of the 99 largest banks worldwide have a strategy in place to phase out coal financing by 2040, which aligns with the climate-safe target set by the IEA. Many of these strategies focus solely on coal used for electricity generation, neglecting the more polluting coal utilized in steelmaking, a crucial component in infrastructure necessary for the energy transition—an important distinction that does not reflect market trading behaviors.

There are signs that lenders re-evaluating their coal strategies are making a difference, according to Barry Tudor, CEO of Australian miner Pembroke Resources Ltd.

From 2020 to 2022, the number of financial institutions willing to fund Pembroke’s Olive Downs steelmaking coal project in Queensland decreased from approximately 20 to about three. However, this trend is now beginning to reverse.

“Institutions have recognized that the situation is more nuanced,” Tudor noted.

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