Analysing 30 leading primary insurers and reinsurers, assessing their policies on insuring and investing in coal, oil, gas, the 6th Annual Scorecard cuts through the greenwash and sorts the meanest from the greenest. The report highlights progress and loopholes, calls out leaders and laggards, and identifies challenges and opportunities for the year ahead.
The number of coal exit policies has grown from 35 to 41 this past year, with major US insurers known for their role in fossil fuels AIG and Travelers finally getting on board. The market share of insurers with coal exclusions has reached 62% in the reinsurance and 39% in the primary insurance markets.
In terms of new power stations, this is good news: according to the report many of the key laggards that are continuing to underwrite new coal projects lack the capacity and expertise involved in insuring complex large-scale new coal power plants.
There is still a lot of work to do: many companies still have no policies excluding coal, and some of those that do extend only to power stations and thermal coal mines, not coking coal mines. Meanwhile Lloyds of London's coal exclusion guideleines are non-mandatory, and they take on 40% of the global energy market.
Insurance company restrictions on oil and gas are only just starting to catch up with those on coal. The new report shows 13 companies have adopted oil and gas restrictions, compared with 41 on coal.
Be it in the IPCC’s 1.5°C report, the IEA’s Net Zero Roadmap or the One Earth Climate Model, climate scientists are clear that there is no space for any new coal, oil or gas projects in credible pathways to limit global warming to 1.5°C. Yet most insurance companies have not taken this scientific evidence on board and continue to offer support to projects and companies expanding oil and gas production
Some insurers like Liberty Mutual, Chubb and Tokio Marine have adopted some restrictions on coal but actively insure the expansion of the oil and gas industry.
For the second year running, companies were ranked on their policies of Free, Prior and Informed consent: i.e. do they support projects that are in conflict with communities, and respect the right of communities to say no?
In summary, very few of them commit to anything like this.
While Allianz and Swiss Re mention of the right to Free Prior Informed Consent (FPIC) in their policies, AXIS Capital was the first insurer to adopt an explicit policy “to not provide insurance coverage on projects undertaken on indigenous territories without FPIC” in accordance with the United Nations Declaration on the Rights of Indigenous Peoples. The policy marks an important breakthrough for the recognition of Indigenous rights and other insurers should emulate it.
“So far, there hasn’t been real regulatory pressure. And there hasn’t been market pressure … as in the short term, it’s still a profitable business. So we think public pressure has really made an essential difference”
- Lindsay Keenan, Insure Our Future (the Guardian)
As part of the StopEACOP Coalition, we've been mobilizing to persuade insurers at Lloyds of London to drop the contraversial East Africa Crude Oil Pipeline.
Not only does this make the pipeline harder to finance, it also informs insurance companies about the damaging impacts of oil and gas pipelines, and is part of the movement to shift the whole industry away from fossil fuels.Sign up here to commit taking regular action with us - it's easy to do from home!
Today (Sat 15th October 2022) the Scottish government has stated that the “era of coal is over”. Lorna Slater, Co-leader of the Scottish Greens, announced at their party conference the preferred position against coal mining, for all types of coal.
This is essentially a ban on coal mining in Scotland, similar to the one on fracking. The Scottish Government doesn’t have ultimate say on mineral extraction, but the preferred position means that local councils won’t be able to permit new coal mines under Scottish policy.
Image credit: the Guardian
Scotland was once the heartland of UK coal mining, as the above 2008 image shows, Scotland dominated the UK in its extraction of coal via opencast mines. The last deep Scottish coal mine, Longannet pit, in Fife, closed in 2002 and the final coal load was transported from an East Ayrshire opencast coal mine in 2020. Longannet coal power station closed its doors in 2016, ending electricity production from coal in the country. However, in recent years there has recently movement towards an application for a new underground coking coal mine in Dumfries and Galloway.
At a site called Lochinvar an Australian company, NAE Ltd wanted to extract up to 33.7 million tonnes of coking coal for steelworks in the rest of UK and beyond (there are no major Scottish steel works using coal) NAE Ltd wanted to mine between 2025 and 2051, under a massive area under Canonbie near Gretna, in South West Scotland. This would have emitted around 73 million tonnes of CO2 and around 750 thousand tonnes of methane, a powerful climate change accelerant. This announcement should stop this application from ever progressing.
The area of the proposed Lochinvar coking coal mine
Coal Action Network strongly supports the Green Party’s position that, “I’m calling on the UK Government to follow us. To make the right call for once. To ban coal extraction for good.”
The UK government is still deliberating on whether to prevent an underground coking coal mine starting at Whitehaven, a decision is due this autumn. The Coal Authority has been taken to Judicial Review by Coal Action Network in the hope that it will reverse its decision on Aberpergwm underground coking coal mine extension. There are also two Welsh opencast coal extension proposals.
The UK government has been keen to be seen to say the right things regarding coal, but has failed to take the many opportunities to stop the mining industry to date.
Today’s decision has been hard won by the communities, campaigners and organisations such as Coal Action Scotland who fought opencast coal mine applications in Scotland and created the foundations for this decision.
Along with our partners in the #StopEACOP coalition, Coal Action Network has been targetting insurers to turn the tide on fossil fuel insurance. This month, QBE, Suncorp, Generali, Aspen and Helvetia stated that they will not be providing insurance support to the East Africa Crude Oil Pipeline (EACOP).
They follow five other insurance companies who ruled out the project in recent months, making 18 insurance companies who have ruled it out overall. QBE and Suncorp are two of Australia's biggest insurers. Generali is Italy's biggest insurer.
In addition, Italy’s largest bank Intesa Sanpaolo, Germany’s second largest bank DZ Bank, as well as Natixis from France, have joined the growing list of banks that have ruled out direct finance for the EACOP project, bringing the total to 24. Spanish bank Santander is also understood not to be financing the project, which would be precluded as part of the bank's Environmental, Social and Climate Change Risk Management Policy.
Is the EACOP project looking less and less viable? There are now no French banks backing EACOP (Total Energies being a French company), and these refusals are coming from the company's former backers.
“With so many of Total’s financiers out of the running to join the $2.5 billion project loan the EACOP needs to proceed, the pressure is growing on those few that remain. This includes South Africa’s Standard Bank, Japan’s SMBC and MUFG, Industrial and Commercial Bank of China and Bank of China, as well as UK’s Standard Chartered, which as chair of the Net Zero Banking Alliance should not be going anywhere near new oil projects of any kind, especially not one as mired in human rights and environmental damage as this.”
-Ryan Brightwell, Campaign Lead Banks and Human Rights at BankTrack
EACOP has been condemned by the European parliament for its associated human rights abuses in Uganda and Tanzania. The pipeline and associated Tilenga oil field are expected to displace almost 118,000 people in Uganda and Tanzania, and since last week nine peaceful protestors were arrested following a student-led peaceful demonstration against EACOP in Kampala, Uganda.
“Lending or underwriting to projects that are mired in human rights violations, lacking in free prior and informed consent is wrong, shameful and unacceptable. The (re)insurers and banks that are still considering or are committed to underwriting EACOP cannot claim innocence, they are on the side of the human rights violators and this therefore makes them complicit.”
-Omar Elmawi, co-ordinator of the StopEACOP
Many of the insurance companies which have failed to rule out insurance for EACOP have syndicates at Lloyd’s of London, where the companies behind EACOP have reportedly been looking for insurance cover. These include Arch, AIG, and Chubb to name a few. These insurers must rule out EACOP immediately, to stand against the human rights abuses that are taking place in the name of this climate-wrecking pipeline. Lloyd’s Council urgently needs to commit the marketplace to policies ruling out new fossil fuel projects in alignment with the science on keeping global temperatures below 1.5C warming.
Companies who have not responded to the campaign's requests for comment are:
Aegis London, AIG, Arch, Brit, Canopius, Chaucer, Chubb, Cincinnati, Liberty Mutual, Lancashire Syndicates and Tokio Marine Kiln.
All of these have syndicates at Lloyds of London. The Lloyds council is responsible for regulating the Lloyds Marketplace (see Lloyds explainer here), and could bring in measures to stop fossil fuel projects, and those with human rights abuses, from being targetted.
We can see these tactics are working. But we need all insurance companies to rule out EACOP, and stop the toxic pipeline at its source. Next, we want Arch insurance to rule it out, and we know that constant pressure works.
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Lloyd’s of London Chairman, Bruce Carnegie-Brown, has allegedly offered an ‘olive branch to eco-activists’ – as reported in The Insurer this week. Having listened to his comments, we’re not so sure – and we certainly won’t be placated until the insurance industry’s actions start speaking louder than their words.
Industry publication The Insurer has released two clips from a recent panel discussion on climate issues with Carnegie-Brown and Canada’s former Conservative prime minister Stephen Harper, chaired by The Insurer’s managing editor, Peter Hastie.
The Insurer’s basis for claiming Carnegie-Brown offered climate activists an ‘olive branch', is based around their assertion that he states ‘eco activists were “clearly” needed’ to bring about change. The clip from the discussion, however, presents a different story. Instead, Bruce describes ‘eco-activists’ as ‘unreasonable people.’ What Carnegie-Brown actually says is ‘clearly’ needed is ‘some change in our perceptions about the impact of the way we behave in our everyday lives.’ This speaks to a desire of top polluters and their enablers, the key drivers of climate change, to push the responsibility onto individual behaviour – and away from themselves. It also implies our everyday lives are equal in their contributions to climate change. In reality, the richest 1% of the population are responsible for more than 15% of global emissions. As highlighted by the United Nations’ IPCC, we need change on a much larger scale in order to avoid the worst effects of climate change. This includes, regardless of existing construction, no new coal plants to be built or become active.
One of Carnegie-Brown’s main criticisms of the growing global movement putting pressure on insurers worldwide was the ‘tendency to be single issue based.’ Instead, he argues that climate change cannot get addressed on a case-by-case basis. We would be the first to agree with that! We need market-wide policy to effectively mitigate climate change. This is something we have been continually pressuring Lloyd’s to take – our first demand of them is an immediate phase out of the insurance of all coal and fossil fuels. Lloyd’s targets are woefully inadequate, and there has been no effort to report on whether members are fulfilling their own commitments, though we know from other sources that they are not. In this sense, the same case-by-case basis ‘strategy’ that Carnegie-Brown is so critical of is driven in part by Lloyd’s own inaction and lack of transparency.
It is frontline communities who bear the brutal impacts of these projects. Our actions stand in solidarity with those most affected by extraction. It’s misleading to caution, as Harper does during the panel, that ‘satisfying the activists in London when you decommission a power plant, but on the ground in some emerging economy it may be terrible.’ This sets up a false dichotomy – implying those ‘on the ground’ are not actively campaigning against extraction, when in fact all the insurance campaigns we work on are led by communities on the ground who are demanding better alternatives to fossil fuels. There are the disastrous risks to people on the ground from the projects that continue to be insured on the London market, such as forced displacement, water contamination, catastrophes such as failed tailings dams, extensive habitat and biodiversity loss.
The concern voiced by the panel on behalf of ‘people on the ground’ is therefore misdirected. It would be better directed by placing exclusions on the Lloyds marketplace which would see these disastrous projects turned away at the door. We highlight that we are continuing to demand the democratisation of the insurance industry to force a just transition for all.
Carnegie-Brown also speaks of the need for ‘common data’ to support sector wide action on climate change. Yet the data is already there. And it says this: there can be no new fossil fuel projects starting after 2021 if we are to stay within 1.5 degrees of warming. Instead, Carnegie-Brown suggests a reduction of carbon intensive activity that ‘reduces every year to get to net zero by 2050.’ This flies in the face of existing data – net-zero by 2050 is not enough. At a bare minimum, we need the insurance sector to be meeting the United Nations’ Race to Zero criteria. Given the availability of extensive scientific evidence, the panel’s calls for ‘data’ in order to act seem really to be calls for data that support their current position, rather than challenge them to change.
So, while The Insurer reports on this positively, characterising it as recognising the need for climate activists to bring about change, at most this amounts to greenwashing. In a telling comment, Stephen Harper advises the insurance industry in the discussion to ensure that they ‘have a story’ (read: PR) about moving in a positive direction – whilst ensuring that this story doesn’t harm their ‘bottom line.’ As ever, profits come first.
A ‘story’ is not enough. We need those who currently hold the power to act to keep fossil fuels in the ground, and support just climate solutions. Until then, it seems we will have to carry on being ‘unreasonable.’
Ffos-y-fran (pronounced in English as Foss-uh-vran and also known as the 'Ffos-y-Fran Land Reclamation Scheme') is a large opencast coal mine in Merthyr Tydfil, South Wales, mining primarily thermal coal. Mining company Merthyr Ltd (previously, Miller Argent) was awarded planning permission in February 2005 on appeal and began opencast coal mining. Planning permission for the opencast coal mining came to an end on 06th September 2022 (confirmed by Merthyr Tydfil County Borough Council to Coal Action Network under a Freedom of Information request).
The two planning conditions that Merthyr Ltd are pressuring the Council to throw out are:
Merthyr Ltd want to delay its restoration responsibility and extend mining its dirty coal from the Ffos-y-fran opencast initially by 9 months (06 June 2023), but then by a further 3 years. The 9 month extension is to give the coal operator enough time to mine a further 240,000 tonnes of coal and submit an application for a 3 year extension but during this time, it’ll be mining as much coal as it can. See all the application documents at P/22/0237.
So, how does Merthyr Ltd seek to justify breaking its promise to the Council and local communities to restore and end opencast coal mining?
In a personally signed letter to the Council, Merthyr Ltd’s Director, David Lewis, claims production was reduced due to lockdowns so not all the coal could be mined in the void that was expected to be by the deadline of the 06 September 2022, so a time extension should be awarded to “ensure the full reserve can be realised”.
There are two issues with the justification attempted in Lewis’s letter:
Via repeated Freedom of Information Requests, Coal Action Network eventually succeeded in forcing the Council admit only £15 million had been deposited by Merthyr Ltd into the escrow account for restoration. In 2018, restoration was estimated to cost £62 million, meaning there is roughly a £47 million shortfall (depending on how much of the site has been restored alongside coal mining since 2018). This is shortfall is highlighted by Merthyr Ltd in its Planning Statement for the time extension: “As the Council is fully aware, there are insufficient funds within the Escrow and restoration fund to allow for the full and successful implementation of the current restoration strategy for the site.”
Merthyr Ltd’s solution is “that the additional time to finish extraction and restoration will enable a more sustainable and modernised restoration scheme”. Although Merthyr Ltd promised to fund and carry out a restoration strategy as a condition to it gaining planning permission, the company now uses its failure to fulfil this condition as a reason to let it mine more coal. And by “modernised”, Merthyr Ltd almost certainly mean cheaper restoration scheme.
Merthyr Ltd transferred most the of the land ownership to Geraint Morgan Legacy Limited of which David Lewis is the sole Director. If the Council attempts to recover the £47 million shortfall for restoration, and Merthyr Ltd cannot pay, responsibility may lie with the landowner, which appears from its Companies House records to only have £2 million in the bank. Merthyr Ltd may reap the profits from years of mining, and the Council could be face bankruptcy to pay the remaining shortfall for restoration.
Similar situations have been seen with other mining companies (most notoriously by Celtic Energy) holding Councils to ransom for permitting more coal mining by threatening to fold or transferring the liability to shell companies, knowing Councils can’t afford to fund the massive costs involved in restoring ex-coal mining sites.
Merthyr Ltd have known for years that planning permission at Ffos-y-fran would expire on 06 September 2022, yet attempts to leverage the fact that it has seemingly failed to support its workers to reskill or find alternative employment as a reason to extend the planning permission: “…it will ensure that current employees have a further 9 months to weather the cost of living crisis and look for alternative means of employment” (Planning Statement).
Incredulously, Merthyr Ltd even goes beyond this neglect towards its workers, to use its own lack of business strategy as it approached the known end of planning permission as a rationale for permitting the initial 9 month extension to allow “…the operators of the mine to look at other investment possibilities.”
Merthyr Ltd’s Planning Statement attempts the justification commonly used be coal mining companies in the UK: “The transport emissions for each tonne of UK coal delivered to Port Talbot are typically five times lower than coal imported from abroad” and therefore, less CO2 is emitted overall if coal is mined and used in the UK. This argument relies on the idea that more coal mining in the UK would displace the same amount of coal being mined in another country, and the coal mined in the UK would be used in the UK.
Coal-laden HGV leaving the Ffos-y-fran opencast coal mine on 13/09/2022
Coal operators are notorious for making lofty claims about the unrivalled quality of coal they would mine—this is to circumvent the presumption against new coal extraction in planning decisions, hoping to fit into the loophole made for exceptional need and economic value.
Merthyr Ltd has rebranded its thermal coal as “dry steam coal”, a term that doesn’t seem to be widely used by anyone except Merthyr Ltd and its trade customers. In reality, this is just thermal coal, and used to be primarily sold to RWE’s Aberthaw coal-fired power station. However, Aberthaw had to stop burning coal from Ffos-y-fran to generate electricity because the European Court of Justice ruled the toxic nitrogen oxides it emitted were too high.
With the loss of this customer, Merthyr Ltd invested £10 million in machinery to refine some of its lower grade coal to ‘metallurgical’ coal that could be used in steelworks in 2015.
Merthyr Ltd has clearly been studying other coal mine applications in the planning system, and likewise in its Planning Statement emphasises Port Talbot Steelworks’ reliance on coal, claiming its thermal coal is needed in the vaguely worded “steel manufacturing process”.
Like most coal operators, Merthyr Ltd (and former coal operators) like to change the rules along the way. The original coal operator agreed to all the conditions attached to the original planning permission in 2005, but in 2008, the coal operator wanted to rip up condition 37 requiring col to leave the site by freight train. The coal operator applied for a 'S73' change to use HGVs to transport 100,000 tonnes of coal each year by road, rather than rail. The company pragmatically reduced this to 50,000 tonnes but HGVs loaded with coal on the roads is dirty and dangerous, so the Council rejected the attempt to change this condition. The company didn’t accept this, and won the right to change this condition on appeal in May 2011 (APP/U6925/A/10/2129921)
Merthyr Ltd want to change the rules again with this 'S73' application for a time extension to mine more coal and delay the promised restoration. Each time the coal operators change the rules, it’s inevitably the local communities living in Merthyr Tydfil that pay the price. Enough is enough.
Latin America's biggest coal mine, Cerrejón, is being blocked by protesting members of communities which have been displaced and polluted by coal mining.
The mining multinational Glencore, has not complied with their commitments including to provide clean water for displaced indigenous and afro-descendant communities.
In La Guajira, a remote region in northern Colombia, community defenders are endangering their lives by stepping into a non-violent confrontation with the mining company; activists here are routinely targetted with violence. We must show that the world is watching and that we support the coal-affected communities' demands.
Three actions you can take in solidarity with the communities:
1. Add your voice to demand Glencore respects protestors and meets their demands
2. Attend the blockade via facebook as a show of international solidarity, organised by Colombia Solidarity Campaign
3. Tweet @Glencore so they hear the communities demands:
Glencore must:
- Meet with the communities represented at the Cerrejón blockade and return to dialogue with them
- Comply with the government order to provide safe drinking water for communities displaced by Cerrejon and to stop polluting the lands of nearby communities
- Ensure the safety of the community defenders
The defenders will not back down until they get an audience with Glencore. They are asking for international solidarity to get the company's attention and to stay safe.
The communities south of Cerrejón have been impeding the progress of Latin America's biggest coal mine for over 30 years through the courts and local government. Now they are taking non-violent action to stand their ground.
We all owe them our suppoort for their decades long struggle to keep fossil fuels in the ground while safeguarding their right to territorial lands from European colonisation.
Each year, the UK government releases a Digest of UK Energy Statistics (DUKES) report. The most recent was released in July 2022, covering the year 2021.
The steady decrease of coal in recent years was not so pronounced between 2020 and 2021. There was a record low use of coal for energy generation in 2020. In 2021, coal increased slightly to provide 2.8% of UK electricity demand.
This article looks at the trends in the coal industry and unless otherwise stated, is based on DUKES 2022.
Demand
Overall energy consumption in 2021 remained low, up on 2020 levels but down 9% on 2019. Consumption of coal and coal derivatives rose by 4% during 2021. Demand for coal rose slightly in 2021, by 3% to 7.3 million tonnes compared to 2020.
Consumption of coal for electricity generation rose 14% to 2.7 million tonnes in 2021, although this was from a record low baseline in 2020. The increase was partly due to a fall in renewable electricity generation and maintenance outages in nuclear plants.
There were 3 coal powered stations operating in 2021 - Ratcliffe on Soar, West Burton, and Kilroot. Drax power station’s coal units were mothballed in March 2021, but will be on standby in winter 2022/23, more info later.
Production
Production of coal fell to another record low in 2021, down 37% from 2020 to 1.1 million tonnes. In 2021, 14% of demand for coal was met by domestic production (of which 9% came from 5 deep mines), 48% by net imports, and 38% was drawn from stocks. Opencast mine production fell 39% to a record low of 1 million tonnes due to mine closures, production restrictions due to Covid-19 and flooding. Three opencast mines were operating in 2021. Between 2011 and 2021 UK coal production has fallen by 94%.
Imports
In 2021 net imports accounted for 48% of the UK’s supply of coal. 2.4 million tonnes of coal for power stations was imported, accounting for 53% of total coal imports. Coking coal imports were up 2.6% at 2.1 million tonnes compared to 2020.
Coal imports rose 1.7% from 2021 and 2020 to 4.6 million tonnes. Four countries accounted for 85% of total coal imports: Russia (43%), the USA (24%) Australia (11%) and Venezuela (7%), with other significant coal quantities coming from the EU, Colombia and South Africa.
| Extract of Table 2.7 UK imports of coal in 2021, (thousand tonnes) | |||||
|
Steam coal |
Coking coal |
Anthracite |
Total |
||
| Russia |
1,121 |
827 |
20 |
1,968 |
|
| United States of America |
388 |
739 |
0 |
1,128 |
|
| Australia |
0 |
511 |
0 |
511 |
|
| Venezuela |
319 |
0 |
0 |
319 |
|
Stocks
Coal stocks fell to 1.7 million tonnes in 2021, which was 62% lower than in 2020, as a result of burning more coal than the UK both imported and mined domestically.
Coal available to be mined
As of June 2022, the Coal Authority estimates that, overall, there are 3,814 million tonnes of coal
resources still underground across the UK. Of the economically recoverable and minable coal resource in current operations (including those in the planning or pre-planning process), 986 million tonnes is in underground mines and 46 million tonnes in surface mines. England and Wales had an 84% share of current UK coal mines and licenced resources, followed by Scotland with 9%. There are none in Northern Ireland.
Demand for coal in 2021 was 2.8% greater than in 2021 at 7.3 million tonnes. Much of this increase was driven by the 14% rise on 2020 levels in coal-fired generation to 2.7 million tonnes, although this was from a low baseline following record periods without coal generation in Great Britain in 2020.
Industrial coal use
The iron and steel industry is one of the main non-electricity generation users of coal. Coking coal is used for coke manufacture, in blast furnaces and direct consumption. In 2021, iron and steel production used 2.6 million tonnes of coal, half of what it used in 2015. In terms of total share, it comprised 36% of UK coal consumption in 2021, up from 14% in 2015, because the whole coal market shrunk, but more rapidly coal for power stations. Total coal consumption by industry rose by 4.7%, although the transformation for coke manufacture and in blast furnaces fell by 6.3%.
Exports of coal
| Coal type | thousand tonnes |
| Steam coal | 1,018 |
| Coking coal | 4 |
| Anthracite | 107 |
| Total | 1,129 |
The UK Government’s commitment to the 2024 phase-out of coal use in energy generation is mentioned several times in the DUKES report. Ending of coal mining, imports and coal used in industry is not included in the phase-out plans.
Outside of the scope of the DUKES report is the Government’s request to Drax, Ratcliffe and West Burton power stations to extend the life of their power stations until March 2023. Drax was due to close its 2 coal units and convert the former coal power station entirely to biomass after September 2022. Under new agreements, the units would only operate if and when instructed to do so by the National Grid when electricity supply would otherwise be low.
Coal is being used as a backup due to Government concerns over gas supply and energy security, but could undermine the coal phase-out while additional contribution of greenhouse gases is a certainty, as coal produces more carbon and methane per MWh than any other fossil fuel or biomass. It is likely that more coal will have to be imported in order to be in stock to burn if the power stations are turned on. It is not clear what will then happen to these stocks if they are not needed this winter.
Talanx, Germany's third largest insurer, is the latest (re)insurance company to confirm to the #StopEACOP Coalition that they will not (re)insure the East African Crude Oil Pipeline (EACOP). They join 11 other (re)insurers, including 4 of the world’s biggest (re)insurance companies - Munich Re, Swiss Re, Hannover Re, and SCOR.
Talanx follows fast in the steps of three other (re)insurers (Argo Group, Axis Capital and RSA Group), who last week also confirmed they would not be involved in underwriting EACOP.
In an email to a member of the StopEACOP campaign, Talanx's Group Strategy and Sustainability Manager, Dr. Jan-Philippe Lüdtke, stated:
"I can now confirm that there is and will be no involvement in EACOP by Talanx or any of its subsidiaries."
This statement implies that Talanx subsidiary, Lloyd’s of London member Argenta Insurance, will also stay away from the controversial EACOP project.
The total number of (re)insurers who have confirmed they would stay away from EACOP is currently 13.
Despite recent media reports claiming that the EACOP has been fully insured through a local consortium, the #StopEACOP Campaign maintains that the project needs substantial international insurance and reinsurance to proceed. See the full statement here.
“More and more (re)insurers are learning about the many problems that EACOP is bringing to the people of Uganda and Tanzania and the health, social, and climate impacts that the pipeline will leave in its wake, and they are wisely distancing themselves from the project. It is time for other (re)insurance companies to follow suit and refuse to be accomplices to such dreadful projects that are premised to only benefit the oil companies Total and China National Offshore Oil Company (CNOOC) at the expense of everyone else,”
- Samuel Okulony, Chief Executive Officer, of Ugandan-based Environment Governance Institute (EGI).
The EACOP project is a climate bomb. Its direction depends on the decisions (re)insurers make today. They have the power to save humanity, to rescue the thousands of people being displaced in Africa, to save the source of the longest river in the world, to save biodiversity that is on the verge of extinction which includes elephants, chimpanzees, giraffes, birds, insects, reptiles, forests, game reserves, rivers and waterfalls that people pay to visit in Africa. All these and more are at their mercy,”
- Hilda Flavia Nakabuye, climate activist and founder of Fridays For Future- Uganda.
“We now have 20 banks, 4 export credit agencies and 13 (re)insurance companies that have confirmed to us that they will not give project financing or underwrite EACOP. The other insurers and banks still considering any involvement in EACOP, like Industrial and Commercial Bank of China, Standard Bank-South Africa, and Sumimoto Mitsui Banking Corporation, are putting corporate needs and profits before people’s lives, nature and climate. It is time they choose sides. The whole world is watching and hoping they do what’s right – which is putting people’s lives before corporate greed.”
- Omar Elmawi, Coordinator of the #StopEACOP Coalition
Now Talanx CEO Torsten Leue must adopt a more comprehensive policy that excludes not just EACOP but all other new oil and gas projects. Talanx currently lags behind not just its major rival Allianz but also its own subsidiary Hannover Re, both of which adopted more comprehensive policies earlier this year.
“It is good to see Talanx HDI finally join the growing group of insurers who are snubbing EACOP. However, it is also imperative for the company to produce a sensible, comprehensive oil and gas policy that goes beyond oil sands alone. Instead of publicly advertising its expertise as an insurer of onshore and offshore fossil fuel extraction, Talanx HDI ought to swiftly exclude the complete unconventional sector, and in general, all new projects along the oil & gas value chain to then decisively phase out fossil fuels in line with climate science.”
- Regine Richter, Finance and Insurance Campaigner at Urgewald
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.
