As more countries pledge zero emissions, coal finance evaporates

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TOKYO (Reuters) – Funding for coal ventures is drying up at ever rising rates as more countries are seeking zero carbon emissions in the middle of the world’s energy transformation, participants said on Tuesday at Asia’s largest coal industry meeting.

As the dirtiest fossil fuel is gradually shunned, the withdrawal from coal by major multinational banks and government-backed entities, which has intensified this year is likely to force coal firms to use offsets to get financing and listed ones to go private to escape shareholder pressure.

“We are seeing a real tide of all these forces moving in the capital markets with insurance companies, banks and other financiers pulling out of coal,”

LACHLAN SHAW, HEAD OF COMMODITY ANALYSIS AT ANZ

“What has changed lately is that China, Japan and South Korea have all committed themselves to net zero carbon emission targets,” he added.

Carbon pricing and credits would become critical instruments for businesses to raise financing for new ventures, so they “can go to the financial markets and say we have a package here that is fully offset from the point of view of carbon emissions,” he added.

Shaw said he plans to go private with more publicly traded firms while shareholders concentrate more on the dangers of coal investments.

Ben Lawson, vice-chairman of the Djakarta Mining Club and chief operating officer of PT Sandman Coal Indonesia, said that even cleaner ventures such as a coal gasification plant in Indonesia under consideration by coal miner PT Bukit Asam would fail to secure financing.

Although gasification is the cleanest way for coal to produce energy or downstream commodity, it is still coal,” he told the conference.” “I think it’s going to be a hard sell to get financing.”

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