ANZ Bank Demands Carbon Divestment as a Condition of Business Loans

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Guest essay by Eric Worrall

If you want to borrow money from ANZ (Australia and New Zealand Banking Group), you better present your carbon offset plan along with your financial records, otherwise regardless of the health of your financials, your application for a loan might be rejected.

Banks Don’t Want to Lend to Australia’s Coal Miners Any More

James Thornhill
October 28 2020, 6:31 PM October 29 2020, 5:05 AM (Bloomberg) —

Financing options open to Australia’s coal operators dwindled further after another of the country’s largest banks said it would end almost all investment in thermal mines and power stations by 2030.

The move by Australia and New Zealand Banking Group Ltd. will add to the increasing difficulty miners face in funding new operations or expanding their existing assets in the nation, the world’s second-biggest exporter of thermal coal.

Financial institutions across the globe are bowing to pressure from shareholders and lobby groups to avoid investments in the fuel. Meanwhile, Australia’s mining lobby forecasts a booming market, on Tuesday saying that it expects Asian demand to rise 35% over the next decade.

Read more: https://www.bloombergquint.com/onweb/coal-financing-squeezed-in-australia-as-anz-announces-exit-plan

If anything the mining lobby’s estimate of 35% growth in coal sales could be conservative.

One major Chinese initiative to clean up big city pollution could actually lead to more coal being burnt. A lot more. Instead of burning coal in the geographical vicinity of cities, the Chinese want to use coal gasification to convert coal into gas.

If this initiative succeeds, Chinese cities will have much cleaner air, because the bulk of the air pollution from burning coal will be emitted during the coal gasification process, at locations far away from the big cities. But China’s coal use would surge.

With coal gasification, slightly over half the coal processed into gas is immediately converted to CO2 to drive the coal gasification process. Coal gasification involves combining steam and coal at high pressure and temperature so the water in the steam catches fire. One of the products of this burn is methane which can be piped to end users, but a lot of CO2 is also produced during the coal gasification process. Half of the coal combines with the oxygen in the H2O steam, the other half combines with hydrogen to form methane, the desired end product.

So a simple back of the ticket calculation suggests that if China converts all their direct coal burning industrial processes to instead burn coal gasification gas, and they want to maintain the same net energy supply for end users, Chinese coal consumption would have to double to compensate for the approximately 50% of coal lost during the coal gas process.

Obviously there are other factors, such as China’s drive to grow their nuclear fleet, which might displace some of the expected growth in coal, and even a nation of engineers like China might take a long time to convert all their coal plants to burn coal gas. But it seems unlikely coal will disappear anytime soon.

ANZ this year reported a 42% plunge in profits. Granted all banks have been hit hard by fallout from the Covid crisis, but you have to wonder about ANZ management’s apparent lack of focus on shareholder value. Choosing to spurn a reliable, profitable major businesses sector with good growth prospects in the midst of a plunging market. Perhaps ANZ shareholders should ask a few relevant questions at the next AGM.

Correction (EW): Nick pointed out my estimate of 50% losses of coal energy content is incorrect.

On review 20% – 40% may be more accurate, but its a difficult number to pin down. In combined coal gassifier plants, gassification substantially increases the efficiency of the plant compared to just burning the coal directly, but this does not appear to be what the Chinese are attempting to do. They appear to want to pipe the syngas into homes and businesses, to replace domestic and industrial coal burning, to reduce air pollution. They appear to be happy to accept an energy efficiency penalty in return for the benefits of cleaner air.
https://www.princeton.edu/news/2017/04/28/synthetic-gas-would-cut-air-pollution-worsen-climate-damage-china

75 thoughts on “ANZ Bank Demands Carbon Divestment as a Condition of Business Loans

    • You’d be better off selling your coal shares wouldn’t you? Writing on the wall, get in before the rush, etc…

      • I see the progressives still believe that just because everyone they know agrees, that proves that everyone agrees.

      • No, most definitely NOT.

        China, India, Japan are still building LOTS of coal fired power stations.

        China’s coa-fired powerl being built or planned is FIVE TIMES what they expect their TOTAL wind to be in 2030

        China helping many third world countries build them as well.

        Those power stations will be still there LONG after the current wind and solar have been “renewed”, probably twice (if anyone can afford to do that)

        Remain ignorant, loy.. its all you capable of.

        • Amazing silly talk for Loydo ( colour me shocked ).

          Talking it up will not change the reality of capitalism. If ANZ and any poor fools who have the misfortune not to have anyone else to invite to create money out of this air to lend to them, don’t want to make money from coal of fossil fuels, then someone else will. All this will do is mean those who are not that stupid to pretend coal can not sell, will even more profit if they can pick up shares at a lower price because lefties are selling them.

          Coal gasification involves combining steam and coal at high pressure and temperature so the water in the steam catches fire.

          Sorry you can not “burn water”. It is already in an oxidised state. That is why you can be sure that no one every developed a car which runs on water, got killed and the plans were hidden in deep hole.

          Water does not burn.

          • Regarding . . . water does not burn.
            Fluorine gas injected into water supports a flame via an exothermic reaction where the fluorine “snatches” the hydrogen off the oxygen.
            Water is a strong oxidising agent for hot metals like zirconium (leading to the Fukishima hydrogen gas explosions). Aluminium foundries are very strict about keeping water away from molten aluminium – or boom!
            And do not spray water onto a calcium carbide stockpile (as happened at a Chinese port) or you get a highly exothermic reaction to produce acetylene and calcium oxide.

      • Both Australia and New Zealand are building up their coal freight wagons fleets. Check out Adani and Aurizon

        • And Australian mining company, BHP, holds the world record for the longest train. Just over 7kms long, 800-900 wagons, 8-10 locomotives spread along the train.

    • I wish I banked with them so I could call, abuse them for being idiots, and cancel accounts
      ABC running this as a lead item today very smug all pro the lobbygroups brave climate actions to save us etc etc
      defunding or just firing the majority of the overpaid abc staff would be wonderful

      • Banking is more an more international. If the local banks are all crazy, try one from another location, or country.

        • “MarkW October 29, 2020 at 8:12 am”

          Having worked for a bank, I would say your advice is more crazy.

    • Australia

      No automobile manufacturing plants – None
      No Oil Refineries – None
      No nuclear power plants – None
      They only have commodities to sell and now maybe no coal. That leaves precious metals, bauxite agricultural products and iron ore.
      Mining will probably be outlawed so that leaves crocodile and kangaroo meat.

      • Sorry John, that is incorrect. We still have four oil refineries, one in Western Australia, one in Queensland and two in Victoria. The main reason they are closing is due to how expensive it is to pay Australians versus the cost of shipping product in from Asia, combined with the cost of building new infrastructure. These refineries are getting very old.

        • BS,
          Now that you mention it, I remember reading an article about just that. I can’t recall, is that true for LNG, as well? It seems I read that LNG is cheaper to import , too.
          That all sounds good until something happens in the world to disrupt shipping and supply chains or, Biden is elected and let’s China make Aus., NZ et al pay a high fee for allowing tankers to get to Aus., NZ and other nations in the region.

          Trump was right about not allowing essential goods be produced and imported from China, like steel. He was proven more right when, after COVID hit us, we found out most of our pharmaceuticals are manufactured in China and China threatened to not export drugs to the US. These are drugs like penicillin, heart meds, etc.
          Of course, we can be sure they’d still export Fentynal illegally to the US.

        • It’s all BS, you wrong too about the WA refinery. BP is taking steps to shut down this facility, as they have determined that it is cheaper to import oil than refine crude in Australia. So much for Australia’s independence on fuel supplies.

  1. I used to work for ANZ Bank in Aus and NZ. I closed my accounts years ago. I expect account closure will continue.

    Buh bye ANZ!

      • I received a job offer from ANZ while working for Renault in Swindon, England in 1995 that enabled me to migrate to New Zealand (First time I flew anywhere). I worked for ANZ for about 10 years (About 5 in NZ, 1 in Aus then 4 in NZ again) all in IT. Lots of projects including transitioning branch systems from IBM OS/2 (They didn’t have any IBM OS/2 and OS/2 applications experts then) to Windows NT, back end was still IBM MVS/CICS though.

    • ANZ in Australia and ANZ in NZ are two different entities but use the same branding. I would imagine the NZ management is even more woke than in OZ, something I thought I would never say. As an Australian I think NZ is one of the nicest places on earth , with great practical and capable people but sadly they seem to have been consumed by wokeness . I hope the fog lifts before they destroy themselves. We are just one election from disappearing down the same rabbit hole.

  2. ” Chinese coal consumption would have to double to compensate for the approximately 50% of coal lost”
    No, it doesn’t work like that. If C takes O from water, it adds H to the fuel, with corresponding calorific value. So there is no loss in the earlier formation of C oxides.

    To take just one reaction you might get
    C + 2H2O -> CO2 + 2H2
    You’ve made CO2. But if you then burn the gas, you get net CO2 + 2H2O, with slightly greater calorific value (the first reaction was endothermic). Net result is just the same as burning the original C, ie conversion to CO2. This remains true if the H2 is converted to methane.

    • Thanks Nick, I added a correction. The process the Chinese are attempting appears to result in some increase in CO2 emissions, but there are confounding factors such as coal quality and how the syngas is used, so it seems a difficult number to pin down.

      • There are other processes not being discussed here. Plasma is used to convert fuels, including coal, into syngas and other things. Some of these reactions are almost entirely pollution free, except production of CO2. So truly clean energy from dirty fuels is in the possible future, already exist in the lab. Plasma produces temperatures in the 2000C range and above without a lot of input energy. Search plasma fuel reformer.

    • Nick Stokes=>”No, it doesn’t work like that. If C takes O from water, it adds H to the fuel, with corresponding calorific value. So there is no loss in the earlier formation of C oxides.”

      It takes 51 Mj/kg to disassociate water (break the H-O bonds). That requires heating to over 2000 C. That heat has to come from somewhere and be accounted for in the efficiency of the coal gasification process. Second law of thermodynamics- “You can’t break even”.

      • “That heat has to come from somewhere and be accounted for”
        Yes. But it has to be fully accounted for. The first law says you can’t win, but it also says you can’t lose (too much, and not 50%). The reduction of water is endothermic, so you do need some direct oxidation of C with air to balance that. But that then goes into enhanced calorific value of the gas when burnt.

  3. I see a great opportunity for a hedgefund specialising in fossile fuel investments. Pity I’m way too old to set one up.

  4. Does this mean that the Greens are investing in ANZ shares, to app;y pressure to the board., It will not work, some other financial house will buy the shares or buy on the market.

    Australian open cut coal mines mean cheap coal. Its in demand.

    VK5ELLMJE

    • ANZ is just doing some PR … the funny part was they got criticized for Virtue Signaling. You see leftard and greentards the fact it doesn’t come into effect for 5 years was a problem they want it today. They simply join the other 3 big Australian banks but most coal companies are financing in Asia and have for a number of years.

      The even funnier part is if it becomes a problem the Australian Government is likely to enact laws to make the action illegal a couple of large mining companies are already pressuring the government to act. The banks already have specific laws they must comply with to have a license, so it will be interesting to see how they react if there bank license is put on the line.

  5. so the water in the steam catches fire

    This is so wrong.
    I once hoped, thought, even expected that WUWT would be the start of an online revolution in science. Breaking the stranglehold of academia.
    Alas, no.

      • I would have explained the chemistry.
        Which, even poetically, is no that hydrogen dioxide catches fire.
        Water is already “burnt” hydrogen.
        It wasn’t the crazy politics of the site that I lamented. Anyone is welcome to their views.
        It was the dumbing down and abandonment of science that was the tragedy.
        WUWT looked like being the replacement for SciAm and New Scientist as they became post-truthy. But WUWT has followed thrir trajectory (if not their political bias).

        • “M Courtney October 29, 2020 at 2:38 pm

          Water is already “burnt” hydrogen.”

          I think the better term to use is oxidised hydrogen.

      • Given the coal uses water as a consumable for a mildly exothermic process which yields CO2 and other products, I think “catches fire” is a reasonable description.

  6. It is this ill-advised virtue nonsense thinking across the global elitists who run the World Bank and IMF that opened the door to China’s BRI debt trap. Terms on defaulted BRI loans will result in many port and railroad infrastructure in 3rd World countries being controlled by Beijing by 2030.

    Here’s a current update on the situation and an informative read for those unfamiliar with what is happening Re: BRI.
    https://www.brookings.edu/blog/order-from-chaos/2020/10/01/seven-years-into-chinas-belt-and-road/

  7. It is a similarly dumb, virtue-signaling move to the whole “divestment” bandwagon. Meanwhile, Chinese and Japanese banks have happily stepped in to fill the void.
    As for coal gassification, that doesn’t really sound like a smart use of the resource, but IIRC, a lot of their coal is low-grade which pollutes more, in the traditional, true sense of the word. I would think that importing LNG might actually be cheaper, but perhaps not, and maybe they want to maintain their energy independence.

    • The equation might not be too bad for China. Yes it’s less efficient than just burning coal in a coal-fired power plant, but it’s probably a cost-effective way of cutting pollution from small-scale coal users. It might even be more efficient. Gas is more versatile than coal, so it may open up new opportunities too. All without having to import energy.

  8. Coal gasification also produces large quantities of coal tar waste, extremely high in carcinogenic polycyclic aromatic hydrocarbons. Unless the Chicoms have a plan, they will be creating large, nasty messes to clean up. In the U.S., we are still cleaning up many of those sites from the town gas era of the late 1800s, many of which are inside the cities. If the Chicoms would simply put modern scrubbers on their coal-fired boilers producing clean electricity, they could reduce the air pollution without resorting to an antiquated, inefficient technology.

  9. So instead of the Australian financial sector making a profit from financing it will fall to the Chinese to do so. In fact, they will buy the mining companies and take the dividends from them also. Sounds like a plan.

  10. So very soon, ANZ will not grant a retailer loan for an ICE car. Only way they can reconcile this crazy position on fossil fuels. The Chinese must think we’re stupid. Do ANZ realise that their action means the future price of coal will be much lower than now. And China will buy lots of it at bargain rate. Yep – we’re stupid enough about strategy. ANZ clearly don’t give a rats about Australia’s future.

  11. Wow, “water in the steam catches fire” in coal gasification. Maybe bankers need to listen to sciencism?

  12. A few months ago I was asked by a client to look at some lease financing documents. The leasing company was a subsidiary of a European bank unfamiliar to me. I looked them up on the internet only to find that they loudly “divested” from the oil industry 6 or 8 years ago. The news release was top of the Google results of course. But in the end the joke’s on Google, because the equipment that my client had lease financed is all used for fracking!

  13. In the Middle Ages one had to be in good standing with the Church to qualify for finance and permits for an enterprise.
    In the Soviet era, one had to be well connected to communist party leaders to obtain permission and finance for nearly anything.
    In China today, the slaves are allowed to accumulate wealth only if it pleases the CCP.
    The religion of Woke, and its SJW/climate dogmas are really not that different st all.

  14. So will ANZ be withdrawing lending under the 10% rule for all oil and gas users not to mention financing service stations trucking and transport busses and private ICE and hybrid cars. Just EVs is it now ANZ?

  15. Bankers are now climate experts (activists) and enforcers. The same tactic has been used in the US for a backdoor gun control making the entire effort political. In the UK a man was deprived of medical treatment for an injured leg until he quit smoking and in turn depriving him of his ability to earn money.

    Only a couple of arm bending examples to enforce an agenda that can’t be enacted by legislation. The lesson is if you don’t comply we will hurt you. Dastardly.

    • It’s a “back-door” way to enforce compliance with an ideology. Unfortunately, nobody in disagreement with that ideology seems to be motivated enough to establish competing businesses.

    • They can do it until the Government acts to make such behaviour illegal … there is a good chance the Australian Government may move on the issue.

  16. Bank insist people who they expect to repay loans are less able to make money. Bank finds more people default. Bank goes bust.

  17. There is a greater irony in what Japan is planning. Gasify west Oz coal to give hydrogen and ship home to fuel their fuel cell cars.

  18. Interesting irony that ANZ outsourced its data and call centres to India. They sat in the middle of a very dirty and less than reliable grid in Bangalore, frequently running on generators. I’m sure if that config still exists its papered over with offsets so management can feel good about themselves.

    I hope corporate Australia votes with their feet in response to a bank that thinks its a government. Why would customers put up with this nonsense from a supplier? They only issue is that Australias 4 main banks operate in a form of soft collusion whee one moves first on something and the others jump in after the water has been tested. Hopefully now the banking world is larger and more open people will retain some options .

    Happily, I left the ANZ a few years ago, so my work is done.

    • “yarpos October 29, 2020 at 2:36 pm

      Interesting irony that ANZ outsourced its data and call centres to India.”

      Not all of them. ANZ Tower, 175 The Terrace, Wellington (Where I worked) is now apartments. There is still a call centre in Wellington I don’t recall where now.

      In 1998, when ANZ started closing branches, ANZ lost lots of customers. The data centre in South Yarra, Melbourne is now gone.

  19. ANZ released a climate change statement today, whereby, the major lender said it would impose low-carbon deadlines for the agriculture, food and beverage, building, energy and transport sectors as it ramped up support for the Paris Agreement goal of net zero emissions by 2050, is because this is modern day corporate behaviour.
    Everyone has their own self interests. It starts with the CEO and the Board wanting to maintain institutional investment, thus under pinning the share price.
    The institutional investors are the big super funds whose boards are very supportive of Green policies and adapt to man-made climate change theories readily.
    Thus, the CEO Shayne Elliott’s job is to maintain/increase the ANZ’s share price. He may achieve that aim, but he is in conflict regarding the energy future for Australians and will be detrimental to our industries.
    Furthermore, as a shareholder, I would like him to give me the scientific evidence that CO2 emissions are driving the naturally occurring global temperatures and their fluctuations, rises or otherwise.

  20. I wish bankers would stick to banking. Interesting to note ANZ share price was over $35.00 in 2015 and $18.70 today. About time they actually did something for the shareholders.
    (For the record I do hold some ANZ shares in my Superannuation Fund.)

  21. “Coal gasification involves combining steam and coal at high pressure and temperature so the water in the steam catches fire. One of the products of this burn is methane which can be piped to end users, but a lot of CO2 is also produced during the coal gasification process. Half of the coal combines with the oxygen in the H2O steam, the other half combines with hydrogen to form methane, the desired end product.”

    Eric, I can hardly believe you wrote that. You have tried to explain it a bit, but neither you or the correspondents who commented on it have got it right.

    Water cannot catch fire, even in the case of those notorious taps and rivers which catch fire! Standard procedure for the Croydon Gas Light and Coke Company was that coal was burnt in special retorts. This produced carbon monoxide as the air flow was restricted. When the coal was hot enough, steam was passed through the retorts. This was REDUCED by the coal (NOT burnt), liberating more carbon monoxide and hydrogen. The steam reaction cooled the coal so air was once more injected to heat it up again. The result was a “Town Gas” comprising a mixture of carbon monoxide and hydrogen. As carbon monoxide is very toxic and both this and hydrogen have no smell, an impurity was added so that any gas leak could be easily detected. The solid left over from the gasification process was coke, which was an excellent domestic heating fuel, being nearly pure carbon. Town gas was, apart from its toxicity, an exceeding good heating agent when burnt in stoves and ovens. Very easily controllable.

    The Town Gas was stored in ‘Gasometers’ more correctly ‘gas holders’, at little above atmospheric pressure. This meant that very little hydrogen was lost. The most famous gasometers were those close to the Oval, Kennington, often remarked by the cricket commentators as “Play will now resume with Lindwall bowling from the Gasometer end.”

    Toxicity and the Great London Smog killed off town gas and the use of coke as a domestic fuel, even though coke was a ‘smokeless fuel’. Hence its preferred use for trains on the London Underground and steam trams. North Sea Gas – mostly methane – took over and all gas stoves and ovens had to be converted to the new fuel source!

    • “Dudley Horscroft October 30, 2020 at 3:58 am

      Standard procedure for the Croydon Gas Light and Coke Company…”

      You lived in Croydon too?

  22. The divestment should not only be of companies that supply fossil fuels but also all those companies that make use of goods and services that somehow involve the use of fossil fuels. It is the users of fossil fuels that keeps the fossil fuel companies in business.

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