London, 25 February: WestLB, one of the largest lenders to the energy sector, has published what is understood to be a first-of-its-kind environmental policy for private sector lending to coal-fired power plants – requiring that they be ready to fit carbon capture and storage equipment and meet high efficiency standards.

In addition to requiring due diligence around environmental regulations and the customers’ use of carbon credits, the policy requires that “best available technology” must be used for new plants or for any expansion or refit – delivering at least 43% efficiency.

“This policy is a material step away from business as usual,” Neuneyer said, adding that it will preclude the bank from involvement in a significant proportion coal-fired power plant financings.

„Westlb has set these standards as a reaction to economic uncertainty caused by regulation, climate change politics etc, to [manage] reputational risks … and out of the belief that sustainable banking cannot only mean financing renewables etc. but also not financing the evidentially most unsustainable projects,” he said.

Christoph Bals, Bonn-based political director of environmental NGO Germanwatch, described the policy as “a good first step”. But he added that the policy may soon have to go further, given the likely need to cut emissions to 85-90% below 1990 levels by 2050.

The Carbon Principles, developed by a number of leading US banks, offer “a consistent approach … to evaluate and address carbon risks in the financing of electric power projects”, but they do not set minimum standards. Neither do the Climate Principles, developed by the Climate Group and involving an international group of financial institutions.

Neuneyer added that he has „indications that other banks are likely to follow” WestLB.

Read the article on Environmental Finance

WestLB unveils lending policy on coal-fired power plants

London, 25 February: WestLB, one of the largest lenders to the energy sector, has published what is understood to be a first-of-its-kind environmental policy for private sector lending to coal-fired power plants – requiring that they be ready to fit carbon capture and storage equipment and meet high efficiency standards.

In addition to requiring due diligence around environmental regulations and the customers’ use of carbon credits, the policy requires that “best available technology” must be used for new plants or for any expansion or refit – delivering at least 43% efficiency.

“This policy is a material step away from business as usual,” Neuneyer said, adding that it will preclude the bank from involvement in a significant proportion coal-fired power plant financings.

„Westlb has set these standards as a reaction to economic uncertainty caused by regulation, climate change politics etc, to [manage] reputational risks … and out of the belief that sustainable banking cannot only mean financing renewables etc. but also not financing the evidentially most unsustainable projects,” he said.

Christoph Bals, Bonn-based political director of environmental NGO Germanwatch, described the policy as “a good first step”. But he added that the policy may soon have to go further, given the likely need to cut emissions to 85-90% below 1990 levels by 2050.

The Carbon Principles, developed by a number of leading US banks, offer “a consistent approach … to evaluate and address carbon risks in the financing of electric power projects”, but they do not set minimum standards. Neither do the Climate Principles, developed by the Climate Group and involving an international group of financial institutions.

Neuneyer added that he has „indications that other banks are likely to follow” WestLB.

Read the article on Environmental Finance

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