Insurance providers Argo Group and Axis Capital, both Lloyd’s of London members, and RSA Insurance Group Limited, a leading UK insurer, have informed the #StopEACOP coalition that they will not be involved in underwriting the East African Crude Oil Pipeline (EACOP) project.
The decision by the three firms brings to 11 the total number of (re)insurers who have committed not to provide insurance coverage for the EACOP project. This is significant because the project needs substantial levels of international (re)insurance to proceed. The firms cite the EACOP project’s potential impact on people, nature and climate as among the reasons for their refusal to underwrite the project.
“We are able to confirm that providing insurance for the EACOP project, its construction, contractors, infrastructure or operation is not within our risk appetite. Therefore, we have not and will not provide insurance services associated with this project.”
- Alex Hindson, Chief Risk & Sustainability Officer, Argo Group
RSA Insurance Group Limited officially communicated that “our underwriters follow our Climate Change and Low Carbon Policy, which means we would not provide cover to the East Africa Crude Oil Pipeline.”
Axis Capital noted the insurance firm “…do[es] not support the East Africa Crude Oil Pipeline” and also confirmed that they “...do not envisage supporting EACOP in the future,” in email correspondence with Coal Action Network.
The EACOP and the associated Tilenga and Kingfisher oil fields are faced with widespread resistance locally in Uganda and Tanzania and globally, with over 1 million people signing a global petition against the projects. The planned pipeline is displacing tens of thousands of households in Uganda and Tanzania.
“TotalEnergies insists on forging ahead with the EACOP project even in the face of substantial local and global opposition. The company downplays the negative impacts of the project while arguing that the project is good for Uganda’s economic development. The truth is that the project is only good for Total and its shareholders and not the frontline communities facing displacement and human rights violations that have harmed their livelihoods. Financial institutions that are serious about protecting human rights and avoiding climate breakdown should rule out supporting the EACOP.”
- Diana Nabiruma of Africa Institute for Energy Governance (AFIEGO), Uganda
The EACOP, its associated upstream oil projects and related infrastructure such as roads, pose a threat to livelihoods, local cultures, sensitive ecosystems and wildlife, including endangered species in the Lake Victoria basin, Budongo forest, Murchison Falls National Park, Biharamulo Game Reserve and others.
The news comes against the backdrop of a worldwide concern that oil companies are making a killing by harming the environment and leaving communities where their projects exist languishing in poverty.
“As oil companies continue their operations in Africa, raking in huge profits, local communities are left to deal with the negative socio-economic and environmental impacts of these exploits. We welcome the move by Argo Group, Axis Capital and RSA not to offer (re)insurance coverage to the EACOP project, a project that not only comes at a huge cost to people, nature and climate but also jeopardizes key sectors that employ the majority of people in Uganda and Tanzania such as agriculture, tourism and fisheries. We call on other financial institutions that are yet to distance themselves from EACOP to do so and seal the fate of this harmful project.”
- Omar Elmawi, Coordinator of the #StopEACOP Coalition
These commitments illustrate the growing level of rejection of the project by international (re)insurers. EACOP can not proceed without international (re)insurance. RSA is a leading UK insurer, while Argo and Axis are members of Lloyd’s of London, the world's largest (re)insurance market. This adds to the pressure on the other Lloyd’s members and the wider insurance market also to reject EACOP. We also call on insurers as investors to proactively support renewable energy projects in Uganda, Tanzania and throughout Africa, where such projects are not in conflict with communities or ecosystems.
In addition to the 11 (re)insurers that have distanced themselves, 20 banks and 4 export credit agencies have committed not to provide project financing for the EACOP project.A recent report noted that the EACOP presents various violations of the IFC Performance Standards and Equator Principles in terms of both human rights and climate impacts.
Bryn Bach Coal Ltd submitted an application in 2019 to expand the existing Glan Lash opencast coal mine by 6.68 hectares (originally 7.98 hectares) with the site boundary at 10.03 hectares. The coal operator wants to extract a further 95,038 tonnes of coal (originally 110,000 tonnes, and represents more than the original coal mine licenced for just 92,500 tonnes) over 6.1 years (planning ref. E/39917). This amounts to around 325 tonnes/week. The Standard Mineral Application Form submitted to Carmarthenshire County Council is only partially filled out. There is a pending call-in request (from 03/01/2020) to the Welsh Ministers to determine this application. It could be quashed by Ministers (as of 27/07/2022, the Welsh Ministers are waiting on the Local Planning Authority Officer's report).
There are many calls to reject the proposed expansion on the grounds of climate change, citing Planning Policy Wales (Edition 10). But Llandybie Community Council and Councillor Davies support it—citing jobs, community fund, and repeating the company’s claims of low climate change impact.
Based on the planning permission issued on 25 January 2012, coal mining was to cease by the end of 2016 and progressively restored, with completed restoration by the end of December 2017, followed by a 5-year aftercare period. However, as so often happens, this promised restoration has yet to even be started. Bryn Bach Coal Ltd submitted a Section 73 time-extension application to delay restoration works, which the Council permitted ahead of the coal operator submitted an application to extend mining. As a consequence, the local community has suffered an unrestored coal mine on their doorsteps for almost 5 years whilst the mining extension application is considered. To add insult to this injury, Bryn Bach Coal Ltd also write in their environmental impact assessment (EIA) that the extension applied for would “enable the full restoration of the existing and the proposed extension”, making the completion of the previously promised restoration now appear dependent on profits from the extension—not dissimilar from the narrative in Celtic Energy Ltd’s extension applications.
Bryn Bach Coal Ltd claim Glan Lash produces ‘premium quality anthracite’, without parallel in South Wales—a suspiciously similar claim is also made by EnergyBuild Ltd about their Aberpergwm deep coal mine in South Wales.
Despite admitting that 50% (which the company recently changed to 25% in 2022, without explanation or evidence) of the coal mined would be burned for domestic heating, and failing to account for what percentage is destined for other uses, Bryn Bach Coal Ltd haughtily claim in their EIA “that to refuse planning permission based on the impact our proposal will have on Climate Change and Carbon Emissions would be globally irresponsible.”
Bryn Bach Coal Ltd does not determine global coal market conditions and cannot predict demand of different industries. Ultimately, the company will sell to whoever wants the coal and is offering the highest price for it. There will be nothing in the planning permission that controls how the coal is consumed. Bryn Bach Coal Ltd's claims around this may well just be an attempt to make the mine seem more acceptable to Planning Councillors and the public - don't fall for it.
Council commissioned the independent reviews of the technical reports paid for, and submitted by, Bryn Bach Coal Ltd on how the coal mine extension would impact water flows (hydrology) and the ecology reliant on that in the area. An independent Planning Ecology report in July 2022 recommends rejection of the application to fulfil the Council’s duty to “maintain and enhance biodiversity under Section 6 of the Environment (Wales) Act 2016, Section 6.4.21 of Planning Policy Wales or under Well-being Goal Two of the Well-being and Future Generations Act 2015 (AResilient Wales)”, and points out “documentation provided by the applicant is misleading in places as it makes frequent reference to the restoration of habitats”. In a letter to the Council, Friends of the Earth Cymru precede this independent Ecology Planning report’s conclusions by pointing out that “While mitigation is proposed in the form of restoration and replanting, these trees and associated landscape proposals will take years to grow back to current levels, and existing habitats may not recover”.
The 2018 EIA report paid for by the coal operator, Bryn Bach Coal Ltd, identifies that ancient woodland extends 2.52 hectares inside the site boundary, which would be at risk if the extension goes ahead, but claim the woodland should not be categorised as ancient woodland. The ecologists refute the 2011 classification by Countryside Council for Wales and Forestry Commission Wales, by citing a more obscure historic 1988 source that does not list it as ‘ancient woodland’. In a more recent EIA report by Pryce Ecologists, they stopped using the downgraded term ‘historic woodland’ and stuck to the correct ‘ancient woodland’ classification. This is reinforced by the July 2022 independent Planning Ecology report citing the woodland to be “circa 120 years old” and “cannot be compensated for by the creation of new woodland within a 17-year timeframe”. This is in direct contraction to what was claimed by the Pryce Ecologists EIA report paid for by Bryn Bach Coal Ltd. The independent report goes on to say it would take 120 years for the newly planted woodland to support the same biodiversity, by which time the existing woodland would be 240 years old if it wasn’t removed, and therefore probably still ahead in biodiversity. The independent report is also critical of the 2018 EIA report as ‘The applicant has incorrectly assessed that none of the hedgerows on the site are “important”’, arguing the loss of these hedgerows should be a ‘material consideration when considering this planning application’, particularly as the restoration plan’s “amount of new hedgerow planting is well below the 2:1 ratio associated with habitat compensation and habitat loss” and “40-50% of this planting is in positions where it will contribute little to biodiversity”.
The independent hydrology review commissioned by Council is highly critical of the reports provided by Bryn Bach Coal Ltd, with specific criticisms like “it is my very strong opinion that the information provided is insufficient”, “here appears to have been a complete absence of research on the hydrological management of abandoned mine workings in the area”, and “unsafe assumption[s]”, “I disagree entirely with this statement, and find it hard to understand how the reported data collection exercise could have informed the understanding of whether the marshy grassland is groundwater-dependent to any degree”. Lambasting one of the most recent hydrology reports by Humphries and Leverton in 2022 (again commissioned by Bryn Bach Coal Ltd), the independent review claims “it is based on a wholly inadequate ecohydrological conceptual model, the central limitation being an extremely poor understanding of the hydrogeology of the area … I am strongly of the opinion that the information provided is not sufficient to enable the Local Authority to determine whether or not the proposals will cause significant ecohydrological impacts”. In relation to the restoration plan, the review highlights that the “current claim that sequential backfilling of mined areas will completely restore the original hydrology as the workings move from west to east is, in my opinion, unsafe.”
As a statutory consultant, Neil Bateman responded to the extension application by pointing out that the Planning Policy Wales 10 (para. 5.10.14-15) applies in this case: “Proposals for opencast, deep-mine development or colliery spoil disposal should not be permitted…” (although acknowledging there is ambiguity about whether this applies extensions or only new coal mines). Bateman also highlights that the Minerals Technical Advice Note 2, para. 29 states “coal working will generally not be acceptable within 500 metres (m) of settlements”. The nearest settlement to the extension would be 440 metres, 60 metres less than the stipulation in this policy.
Bryn Bach Coal Ltd is the coal mining company that operates the Glan Lash opencast coal mine, which has been dormant since planning permission expired in 2019. In 2018, it applied for an extension which was unanimously rejected by planning councillors in 2023. Undeterred, Bryn Bach Coal Ltd is trying again! This time with a slightly smaller extension of some 85,000 tonnes rather than 95,000 tonnes. Check out the company's application and public responses so far.
Coal to be sold: 85,000 tonnes in total – average of 328 tonnes per week
CO2: Approximately 271,000 tonnes of CO2 in total (2024 BEIS Conversion Factors)
Methane: ~659 tonnes in total - circa108 tonnes each year.
Coal operator: Bryn Bach Coal Ltd – since grant of planning permission January 2012 - 2019
Type: Anthracite coal
Mining method: Opencast
Purported destination: Brake pads, water filtration, brick colourant etc.
Local Planning Authority: Carmarthenshire County Council
Address: Glan Lash Mine Site, Shands Road, Llandybie, Blaenau, Carmarthenshire SA18 3NA
Physical size: 10.03 hectares, with a void of 5.92 hectares (extended void = roughly 11 football pitches)
Time: 5.4 years of coal extraction, 7 years of all works on the site
Published: 15/10/2024
Consultation question: Considering the information presented in this call for evidence paper, and your own knowledge and experience, what are your views on the extraction of coal in Scotland?
Our response: The Welsh Government's most recent policy statement on coal should provide a starting point for the Scottish Government to build upon (https://gov.wales/coal-policy-statement-html) in developing its own policy, as there are clear and relevant parallels between both Governments.
Both Wales and Scotland has a long legacy of suffering the localised impacts of environmental blight and hazardous conditions of coal mining, with nearby communities rarely seeing a significant share of the economic benefits. Wales is still littered with unrestored or poorly restored coal mines. It was reported that only this year are the final abandoned coal mines in Scotland being restored - again, often to revised, lower standards that what was promised nearby communities due to insufficient restoration bonds.
Now more is known about climate change, both Wales and Scotland have led the way in developing progressive policies and practice to realise their ambitious targets. This cannot include viably include coal, which is worse in CO2 emissions than natural gas and oil in its conversion factor to energy. The EIA Pathways to Net-Zero report make this very clear, underscoring that no new coal mining for any purpose can be part of a pathway to Net-Zero by 2050.
A critical part of that report is no new coal mining for any purpose. The report goes further to explicitly include coking coal for steel in this prohibition. Port Talbot Steelworks in South Wales and British Steel in England are the 2nd and 3rd largest single-site sources of CO2 in the UK - because they burn coal. Any policy that differentiates between the extraction of coal for energy production and coal for steel production, ignores this growing threat to meeting climate targets across the world. It would also ignore the rapidly escalating developments around the world in decarbonising the steel industry. Green steel is on its way, with the first delivery of commercial quantities made from Sweden in 2021. Unfortunately, once investors have opened a coal mine, they will seek return on that investment and find alternative markets for the coal, or laggard steelworks that still rely on coal in the future. So permitting new coal mining for steel will prop up the biggest polluters and discourage transition to new technology and practices.
There is no viable future for any of us that relies on coal to get us there. Scotland should be using its just transition fund to skill its inhabitants in the industries of the future, not ploughing people into the industries that destroy that future.
West Cumbria Mining Ltd want to extract 2.78 million tonnes of coking coal annually, right up to 2049.
Cumbria County Council approved the application; but campaigning, including a 114,000+ signature Coal Action Network petition, led government to make the decision itself and call a public inquiry. Subsequently the government approved the mine in December 2022, but the decision is subject to legal challenges. Work has not started and financing is not in place.
Coal & refuse to be excavated: 67 million tonnes in total - almost 3 million tonnes per annum (at full production) - WCM Planning Statement, Sep 2021
Coal to be sold: 64 million tonnes of coal in total - 2.78 million tonnes of coal per annum (at full production) - WCM Planning Statement, Sep 2021
CO2: Approximately 200 million tonnes of CO2 in total - 8.8 million tonnes of CO2 per annum at full production (2022 BEIS Conversion Factors)
Methane: 340,000 tonnes of methane which is 34 million tonnes CO2 equivalent (not included in the figures above) - 15,000 tonnes of methane per annum at full production (mid-range estimate, measured over 20 years, Global Energy Monitor's Global Coal Mine Tracker)
Coal operator: West Cumbria Mining (Holdings) Limited, which is 82% owned by EMR Capital Investment Limited (No. 3B PTE Ltd) registered in Singapore.
Type: Coking (metallurgical) coal
Claimed destination: primarily burned in steelworks in the UK and Europe
Local Planning Authority: Cumbria County Council
Address: from the former Marchon site, Pow Beck Valley, to St. Bees Coast, Whitehaven, West Cumbria
Physical size: principal seams to be worked would be the Bannock Band and Main Band, which are at a depth of approximately 350 metres over 23ha
Time: applying for planning permission from 2022-2049
Published: 03/08/2022
Update - Sat 15th October 2022 the Scottish Government De Facto banned coal mining. As such this article is for historic interest only, this is not a live campaign.
New Age Exploration Ltd (NAE Ltd) proposes to extract up to 33.7 million tonnes of coking coal for steelworks in the UK and beyond between 2025 and 2051 from a mine under Gretna and Canonbie, near Carlisle, in South West Scotland. This may worsen local air quality, reduce the value of nearby residential properties, make local roads more dangerous with HGV traffic, and will emit around 73 million tonnes of CO2 and around 750 thousand tonnes of methane, a powerful climate change accelerant.
NAE Ltd has a conditional licence from The Coal Authority and aims to secure full planning permission by 2023-4.
Local impacts
Global impacts
(Company-supplied in the application for a conditional licence to The Coal Authority in 2020. Redacted by The Coal Authority)
Eyes and ears on the ground: ‘Lochinvar Coal Limited’ employs someone in the role of ‘community-liaison’ based in the town of Canonbie.
Dirty coal: NAE Ltd’s target sulphur content is 1.2-1.4% whereas current imports from USA are less than 1.2%, with some as low as 0.9%. The higher sulphur content of coking coal from the proposed coal mine in West Cumbria recently led an industry leader to rule out its use in UK and European steelworks.
Rolling the dice: based on a Wood Mackenzie forecast of European demand for imported coking coal to grow over 50% from 2017 to 2035. Recently, serious flaws in Wood Mackenzie forecasts were revealed in a public inquiry into the proposed Whitehaven coal mine—as it fails to properly consider rapidly increasing momentum behind green steel.
Best corporate quote: “Investor confidence is then expected to slowly return, making it possible to again raise larger amounts of funding required to progress quality coking coal projects, notwithstanding growing climate change related general anti-coal sentiment globally.” (Licence application to the Coal Authority, 2020)
Shaking the money tin: NAE Ltd claims it is currently progressing discussions for direct investment from potential investors, but its existing relationships have been redacted from the licence application.
2012: New Age Exploration Limited (NAE Ltd) acquired the Lochinvar licence. NAE Ltd set up Lochinvar Coal Limited (formerly Canonbie Coal Limited) in 2012 to operate the Lochinvar Coking Coal Project. However, NAE Ltd remains its parent company, and holds the exploration and conditional licences directly.
2013: NAE Ltd drilled 10 deep boreholes to a total of 3,752 metres underground, through its subsidiary, Lochinvar Coal Limited, on the Scottish/English border near the town of Canonbie, to estimate coking coal quantities and access . This follows drilling by The National Coal Board, British Geological Survey, and Greenpark Energy between 1979 and 2009.
2014: NAE Ltd conducted a scoping study, subsequently updated in 2017.
2014-2016: Coal prices fall to historic lows of USD$70/tonne and NAE Ltd put the project on hold as it was unable to raise funding. Prices remained volatile up to 2019, reducing investor confidence.
2019: NAE Ltd conducted a “Project optimisation study” and touted for partners or investors to finance the development of a coal mine—then the UK and many countries went into lockdown as the pandemic was responded to.
2020: NAE Ltd paid a £13,800 application fee to the coal authority for a coal mining and exploration conditional licence.
2021: JHD Exploration Ltd Dumfries and Galloway Council (within which the Lochinvar test-drilling took place received) for the first time since 2013 to notify them of test drilling.
2022: NAE Ltd had its conditional underground licence renewed by the Coal Authority on 21 January 2022—just 4 days before issuing the Aberpergwm coal mine expansion, in Wales, a full licence. This occurred in a changed context of increases in the price of coal through 2021-22, sanctions on Russian coal has driven demand for alternative sources, production has ramped up post-lockdowns, and the UK Government is broadcasting a more favourable approach towards new coal projects again.
Going forward...
2023-2024: Between 2023 and early 2024 NAE Ltd aim to secure planning permission.
2025: Towards the end of 2025, NAE Ltd aim to begin extracting coal.
NAE Ltd is the named coal mine operator for the Coal Authority's Lochinvar conditional licence. NAE Ltd is a reasonably small company Australian-based mining company, listed on the Australian Stock Exchange.
Dealings in the UK and elsewhere: NAE are a NAE Ltd previously operated the Redmoor Tin-Tungsten mine in Cornwall under Cornwall Resources Limited, in a joint-venture with Strategic Mineral PLC. NAE Ltd is also advancing gold exploration projects in Australia and New Zealand, and previously (dates) advanced thermal and coking coal exploration projects in Colombia.
Financial turmoil? NAE Ltd's shares have tumbled by over 46% on the Australian Stock Exchange over the past year, and have been erratic over the past 3 years - decline is clear though over the past 6 months.
Is NAE Ltd actually a mining company? From its size, current portfolio, and the sale of its share in the Redmoor Tin-Tungsten mine in the development stage, it appears NAE Ltd is focused on exploration and development rather than long-term mine-operation. Two of the 3 Directors of NAE Ltd have backgrounds in raising capital and equity capital, further signalling the company’s business model.
This means NAE Ltd may look to sell the Lochinvar coal mine to another operator early or at some point during its development. The company that buys the coal mine licence will not be subject to the same financial and competence tests that NAE Ltd has been, raising concerns about how the coal mine will actually be operated.
While NAE Ltd has yet to apply for full planning permission, the preparation for an application is underway.
Coal Action Network is concerned by the content of the proposals:
The independent verification of applicants’ fossil fuel emissions was to be introduced to improve the reliability of this important information, and give confidence to the data reported by companies given access to the UK energy generation market. The postponement of this introduction therefore lengthens the doubts cast over the claims made by applicants to the capacity market. The Government claims the reason for the postponement is that there may not be enough independent verifiers in time for applicants to meet this condition. This is a failure in preparation on the part of the UK Government, to rigorously implement the climate policy it created and meet its own targets. We would expect this to be resolved well before the next capacity market auction as non-independent accounting for carbon emissions cannot become normalised or it will risk under-representation of the emissions of the CMUs and the UK overall.
The amendment to allow mothballed plants to bid in the upcoming capacity market auction is concerning where it may increase the potential for recently mothballed coal power plants to come back online and result in a higher proportion of coal within the UK energy mix 2023-24, until the 2024 coal phase-out date begins to have effect. We categorically oppose any move that slows down or reverses the declining use of coal for power in the UK—including the recent announcement by BEIS to delay the scheduled closure of West Burton coal fired power station. The UK Government states that it is necessary to allow mothballed power stations to participate in the upcoming capacity market auction to increase competition, which it hopes will reduce the cost of electricity generation—particularly when there are greater demands on the grid, such as during the winter months.
If the UK Government invested in renewable technology development and deployment to the same extent that it historically subsidised the fossil fuel industry, competition might realistically be fulfilled by renewable power generators instead. The current challenges are due, to an extent, the policy failure of this government and successive governments to put glib speeches on climate change into action. Moving forward, we urge the UK Government to avert this energy generation challenge recurring with a package of climate-friendly measures, including:
We are concerned that the 2024 coal phase-out date is being used by the UK Government to deflect criticism for its support of using coal up until that date, when what we need is the most rapid phase-out of coal that is possible as the UK careers further from its climate targets. This attitude has been captured in comments made this year by two leading cabinet Ministers, “Net zero is by 2050. We are not at 2050 yet.” – Jacob Rees-Mog, and “Give over. We’re still committed to phase out by Sept 2024.” – Kwasi Kwarteng (in relation to extending the coal powered operations at West Burton).
Finally, as we have commented before in previous consultations, the 2024 phase-out date should be legislated on, to ensure that it happens. As this consultation and other recent moves by this government show, this or any future administration is not currently prevented from taking steps which cast doubt on or undermine that commitment.
Reposted from original press release by Insure our Future
Utilities are struggling to find insurance to build new coal power outside China, finds a report released today by the Insure Our Future campaign and Korean non-profit Solutions for Our Climate, which have obtained documents providing a rare snapshot of the state of the industry.
The insurance contracts for KEPCO, Korea’s national power utility, also reveal that it is having to turn to smaller, inexperienced companies to secure cover for coal power plants that are already in operation as growing numbers of mainstream insurers withdraw from the sector.
“Major international insurers have withdrawn from coal projects and been replaced by a haphazard coalition of the willing, consisting of a few global climate laggards, small speciality insurers and assorted companies from the Global South. Our report exposes Starr, Liberty Mutual, Berkshire Hathaway, Allied World and Lloyd's of London as the coal industry’s last lifeline."
- Peter Bosshard Global Coordinator of the Insure Our Future Campaign and report author
Since the Insure Our Future campaign launched in 2017 at least 39 insurers have ended or limited their cover for new coal projects. However, the report confirms that even prominent international brands like Hannover Re (Germany), SCOR (France), QBE (Australia) and Helvetia (Switzerland) continue to underwrite existing coal plants, supporting companies like KEPCO that have no plans to phase out coal in line with climate targets.
Coal is the biggest single source of carbon emissions. To stay on track for the 1.5°C Paris Agreement climate target, consumption of coal must fall by 9.5% per year.1 No investment in new fossil fuel production is consistent with that target, according to the International Energy Agency, yet it warns that coal demand could reach all-time highs in 2022 and stay at that level until 2024.2
The insurance industry is under growing pressure to align its policies with 1.5°C. UN Secretary General Antonio Guterres told the Insurance Development Forum last year: “We need net zero commitments to cover your underwriting portfolios, and this should include the underwriting of coal – and all fossil fuels!”3
Asia is at the centre of global coal power generation and development, accounting for 91% of all plants planned or in construction worldwide (414GW out of 457GW) and 73% of operating coal plants (1,518GW out of 2075GW).4 KEPCO is a major player, developing and operating coal power projects in several Asian countries and arranging insurance on the global market.
In March 2018, KEPCO signed contracts with 19 insurers to underwrite the construction of the 1.3GW Nghi Son 2 plant in Vietnam for a total $7.2 billion. Four years on, 72% of the insurance capacity which underwrote that project has been withdrawn from the market.
“It is now unlikely that large new coal power plants outside China can be insured. The withdrawal of so many insurers has made it much more cumbersome and expensive to obtain cover. The few insurers who remain will find it challenging to provide the vast expertise and capacity required to insure a complex new coal power plant.”
- Peter Bosshard
The Insure Our Future report, EXPOSED: The Coal Insurers of Last Resort, analyses documents provided by the Office of Korean National Assembly Member Soyoung Lee, which give details of insurance contracts for five KEPCO coal power projects. Governments, insurers and insurance brokers do not normally disclose information about which companies insure which projects, so it presents a unique insight into the withdrawal of insurers from the world’s leading coal market.
When KEPCO insured the construction of Nghi Son 2 in March 2018, most international insurers had yet to adopt coal exit policies. The project was underwritten by numerous large multiline and speciality insurers and reinsurers, led by Germany’s Allianz with $1.1 billion.
By October 2021, when KEPCO insured the construction of the 1.2GW Vung Ang 2 plant in Vietnam for a total $4.4 billion, most large international insurers had withdrawn from the coal market. Asian insurers provided 55% of total capacity, led by Japan’s MS&AD with $1.2 billion of cover, North American insurers provided 38% and European insurers 7%.
Half (53%) of the insurance capacity provided to Vung Ang in October 2021 has now been withdrawn from the market with MS&AD, Sompo and Tokio Marine in Japan, Hiscox in the UK and AIG in the US announcing that they will no longer insure new coal projects. China also announced in September 2021 that it will no longer build coal power projects overseas and Chinese insurers are expected to exit the international market.
Five “insurers of last resort” now provide 72% of the capacity for Vung Ang 2 which is still available for new coal projects: US companies Starr, Berkshire Hathaway and Liberty Mutual (the only insurer with a coal exit policy that allows it to continue covering new projects); Allied World in Bermuda; and eight other insurers operating in the Lloyd’s market. 5
Lloyd’s of London insurers, which include Allied World and two Liberty Mutual subsidiaries, now provide 37% of the capacity still available to the market. In December 2020, Lloyd’s ruled out insuring new coal projects from 2022 but has since made clear that it will not require insurers in its market to follow the policy.
"These findings make clear that the Lloyd's market, Starr, Liberty Mutual, Berkshire Hathaway and Allied World are the world’s coal insurers of last resort. At a time when we urgently need to accelerate the transition away from fossil fuels, their reckless support for new coal projects drives us ever closer to unmanageable climate breakdown."
The replacement of large, experienced international insurers with a wide variety of smaller actors also affects the operation of existing coal power plants. In June 2021, KEPCO had to find 24 different insurers to provide $556 million of cover for the operation of its small 206MW Cebu Naga power plant in the Philippines. Eleven were not insuring any other KEPCO projects and one, New India Insurance, lacks the A-credit rating that project financiers typically expect insurers to provide.
Global insurance broker Willis Towers Watson warned as early as January 2019 that “the exodus of many international insurers from the market for coal risks complicates securing property coverage” and “this reduction in available capacity will invariably see upward pressure on rates and coverages.” 6
However, the report also shows that many insurers with coal exit policies are continuing to provide cover for companies such as KEPCO that have no credible plans to phase out coal production. They include leading brands Hannover Re, which only plans to phase out insurance for the biggest coal companies by 2025, SCOR and QBE, which have a 2030 target, and Helvetia, which has no phase-out target.
“KEPCO and other power utilities need to rapidly phase out their coal power fleets in line with global climate targets, and insurance companies should stop insuring power utilities which have no credible phase-out plans. Power utilities and their insurers need to urgently move beyond a pathway which is projected to take the planet to a catastrophic 2.7°C of global warming by the end of the century.”
Only 37% of OECD coal power capacity (100GW) is scheduled to close by 2030 and 6% of non-OECD capacity (100GW) by 2050. 7
The report says that for insurers to align with the Paris target they must:
1 One Earth Climate Model, Sectoral Pathways to Net-Zero Emissions, 18-5-22
2 IEA, Coal power’s sharp rebound is taking it to a new record in 2021, threatening net zero goals, 17-12-21
3 UN, Secretary-General’s closing remarks to Insurance Development Forum, 18-6-21
4 Global Energy Monitor, Global Coal Plant Tracker: Coal-fired Power Capacity By Region, January 2022
5 Beazley, Chaucer, Canopius, Markel, Antares, Cincinnati, AEGIS and W.R. Berkley.
6 Willis Towers Watson, Ready and Waiting? Power and Renewable Energy Market Review 2019
7 Global Energy Monitor, Boom and Bust Coal, April 2022
Read the full report here
Reposted from Insure our Future
Lloyd’s of London published its 2021 Environmental, Social and Governance (ESG) Report two days ahead of its Annual General Meeting on May 19.
Lloyd’s second ESG report is a document almost completely lacking in substance which does more to obscure the climate destroying actions of its members than to shed light on how it intends to reach its often stated net-zero by 2050 ambition. It has almost no information on concrete climate action and raises many serious questions about Lloyd’s.
Most notably, Lloyd’s second ESG report says nothing about the outcomes of the climate commitments it made in its first ESG report released at the end of 2020. Previously, Lloyd’s stated it was asking its managing agents to not provide any new cover for coal-fired plants, coal mines, oil sands and Arctic energy exploration from 1st January 2022. Yet, its current report fails to report on whether or not its members are fulfilling this commitment.
Whilst Lloyd’s ESG report doesn’t tell us, we already know from other sources that not all members of Lloyd’s market have stopped providing new insurance cover for new coal projects.
For example, a recent public report by London based insurance broker Alesco, noted that while many Lloyd’s members have adopted the policy, others continue to accept new coal business.
Why has Lloyd’s, which knows these facts, not been open or honest about them in this report? Which Lloyd’s members are ignoring Lloyd’s stated ambitions? What action is Lloyd’s taking to bring those members into line? What value do Lloyd’s stated climate ambitions and targets have when they are so plainly ignored by some of its members with no consequence?
Instead of addressing these obvious questions Lloyd’s is trying to cover up its failure to deliver on its climate commitments. In other words, Lloyd’s 2021 ESG report is greenwash.
Whilst avoiding mention of its failure to have all members exclude the very worst fossil fuel projects, this report goes much further in the wrong direction. Lloyd’s doubles-down on requiring its members to continue to insure what it terms the “harder-to-abate sectors”, by which it presumably means it plans to adopt no restrictions on new oil and gas exploration. Lloyd’s completely ignores the IPCC, the IEA and others which make clear that no new oil and gas projects are compatible with staying within 1.5C global warming, and that existing production needs to be phased down.
One example of concrete climate action Lloyd’s trumpets is appointing its first Sustainability Director. The ESG report fails to mention that Lloyd’s management gave the role to one of its Senior Public Relations Officers, who had no previous sustainability-related experience. Is that an example of bringing in a great communicator to an important new priority role? Or a classic example of treating ESG as more of a public relations exercise than a substantive issue? What is clear is that the quantity and quality of largely substance free public relations materials from Lloyd’s about sustainability has increased significantly in the last 12 months.
Lloyd’s Council Chair Bruce Carnegie-Brown and its CEO John Neal sign off the report saying:
“We hope this report equips you with a helpful and comprehensive summary of our ESG activity – and we look forward to working with you to build the braver world it imagines.”
In a climate crisis that presents an existential threat to life on earth, Lloyd’s is stuck in its PR bubble talking about sharing risks to create a braver world, when in reality its members provide the insurance cover for, and invest in, climate and human-rights destroying fossil fuel projects and companies.
Lloyd’s new ESG report exemplifies many of the worst aspects of corporate greenwashing. Saying it is committed to net-zero by 2050, but not having detailed targets and not enforcing the targets it does express is not a climate science aligned policy, it is greenwash. Lloyd’s Council, led by its Chairman Bruce Carnegie-Brown, needs to start taking genuine climate action by ensuring Lloyd’s members stop insuring and investing in new fossil fuels and phase out existing investments and insurance in-line with climate science. Nothing less will do.
Finally, there are a few words in the report that I do agree with:
Rebekah Clement Lloyd’s new Sustainability Director: “The work is nowhere near done…”
David Sansom Lloyd’s Chief Risk officer: “We have much more to do…”
Alesco Energy Update 2022. Page 21: “1 January 2022 saw the introduction of the new Lloyd’s directive as regards to coal; with the initially proposed stance being that no new coal business was to be underwritten from that date. However, in light of subsequent discussions between various parties, there has been a subtle change of emphasis with each syndicate now having a more individual responsibility towards their attitude to the new coal business. Many have chosen to remain with the existing policy of not putting any new coal accounts onto their books; but others have adopted a policy of accepting new business where the client can demonstrate a clear approach to working towards an orderly transition to renewable energy”.
There are a range of organisations fighting against this disastrous proposal, each with different tactics and strategy, but working together to stop the mine. We encourage you to look at their information and get in touch direct if you'd like to work with them.
South Lakes Action on Climate Change (SLACC) is a community-based charity which brings together people who want to do something about climate change and promote a more sustainable lifestyle. SLACC is currently running a legal challenge against the Government's approval of the proposed mine.
Friends of the Earth is a grassroots environmental campaigning community. From campaigners and lawyers to local action groups and supporters across the country, it pushes for change for people and planet. Friends of the Earth is currently running a legal challenge against the Government's approval of the proposed mine.
Extinction Rebellion North Lakes and Extinction Rebellion South Lakes are active on this issue across Cumbria and bring together people in opposition to the mine at a local and national level.
Campaign Against Climate Change believes in the power of street protests, big and small, in working in coalitions as part of a wider movement and in making the links between climate change and other social justice issues. They have a trade union group and produced the report Climate Jobs: Building a workforce for the climate emergency
Left Unity is active in movements and campaigns across the left, working to create an alternative to the main political parties. The Cumbria and North Lancaster group is involved in protests against the proposal.
BankTrack is the international tracking, campaigning and civil society support organisation targeting private sector commercial banks (‘banks') and the activities they finance. Bank Track has written this brilliant profile on the proposal
Reclaim Finance is a research and campaigning organization that is looking at the funding of the proposal.
Cumbria Action for Sustainability undertakes practical projects with communities and organisations of all kinds to encourage the transition from high to low carbon lives and livelihoods. It has produced research on the potential in Cumbria for jobs which would contribute to decarbonisation as an alternative to the coal mine.
And of course there are local people against the proposal, non-affiliated individuals and local representatives of organisation such as the Green Party, trade unions etc.
