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.
The invasion by Russia of Ukraine is unjust and unjustifiable. It’s logical for other governments to try to cut off the money for the Russian regime, by stopping buying Russian products including coal. The UK government has announced that it will stop buying Russian coal and oil by the end of this year and Russian gas “as soon as possible thereafter”. The European Union’s timetable is faster – no Russian coal to be bought after mid August 2022. Prior to this conflict Russia supplied around 40% of the coal consumed in European power stations and steel works.
Proponents of the proposed Whitehaven coking coal mine, are calling for the Rusisan invasion to be used to justify extracting more coal in the UK.
Update: the decision on Whitehaven by Michael Gove is now due on or before the 8th December 2022.
There has been a delay in making this decision by an additional delay of a month. This isn't the first delay to this decision, nor the first time Michael Gove, as Secretary for State for Housing Communities and Local Government, has had the power to stop this application. As he held the role in the summer before Liz Truss briefly came to power.
Several years ago West Cumbria Mining Ltd, backed by an Australian company, EMR Capital, applied to extract coal from a new underground coking coal mine under the sea by Whitehaven, Cumbria. After a legal challenge the company is seeking to extract 2.78 million tonnes of coal a year until 2049. The Secretary for State for Housing Communities and Local Government said that the UK government would decide whether this application should be allowed to go ahead which lead to a planning inquiry in September 2021. The Planning Inspector had written his report and made his recommendation by Spring 2022. The Inspectors report will be made public when Gove announces his decision.
Previously Gove’s department has said that a decision on this application will be given on or before the 17th August 2022 after the original date of 7th July 2022 was going to be missed.
West Cumbrian Mining Ltd (WCM), the company behind the application say that if this coal were extracted 83% of the coal would be sold abroad. Only 13% of this coal is expected to be used by UK steelworks (it is coking coal, a purer coal than that normally used in power stations). On the company’s website and at the planning hearing WCM focussed on extracting coal in Cumbria and displacing coal imported to the UK from the USA, not Russia.
There are now some calls from long term proponents of the mine such as Mike Starkie, the Conservative mayor of Copeland, the constituency that includes Whitehaven, to approve this application on the basis of the Russian invasion. Others have suggest allowing the extension application at Abepergwm in order to stop the UK’s use of Russian coal. However no-one who previously thought coal at either site should stay in the ground has been convinced by this argument. The rational is misleading and counterproductive as shown in this brilliant article by Ukrainian climate activist Svitlana Romanko.
Svitlana writes, "we Ukrainians have a clear response to the fossil fuel industry and the politicians on its payroll: Do not use the pain and suffering of our people to double down on [fossil fuel] production, while deploying a “peace-washing” rhetoric that makes it seem as if you are, in fact, helping the world free itself from Russian tyranny. Fossil fuels themselves, like the missiles they finance, are weapons of mass destruction."
Comparably increasing coal production in the UK won’t impact whether or not coal is mined in Russia. There are several countries still buying large amounts of Russian coal. However, decarbonisation of the two primary steel producers – Port Talbot Steel works and Scunthorpe steelworks - will reduce coal demand significantly and reduce emissions, while keeping most steel workers in their jobs.
Additionally and crucially, the British Steel industry isn’t behind the Whitehaven proposal either:
Chris McDonald, chief executive of the Materials Processing Institute and chair of the UK Metals Council said, “I think it’s important to be clear that even if this mine opened tomorrow, it would not displace a single tonne of Russian coking coal from the UK – and I can say that with confidence”. Tata Steel already does not use any Russian coking coal. British Steel have said they can’t use the coal from Cumbria because the sulphur levels are too high. So there’s no possibility that a new mine can meaningfully displace any Russian imports.
While the end of Russian coal imports to the UK and Europe is something Coal Action Network and others have been campaigning for, we grieve for the way in which it has come about.
While the UK government may wish to hide its bad decision making behind world events, justifying a new coal mine because of Russia’s invasion of Ukraine doesn’t add up. COP26 agreements need to be honoured and coal at Whitehaven needs to stay where it is – underground.
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
There is a law in Wales that helps the country all work together to improve the environment, the economy, the society and the culture. For people, for the planet. For now, and for the future. It is called the Well-being of Future Generations (Wales) Act 2015.
Is a coal mine extension at Aberpergwm compatible with this Act? It seems unlikely given that one of the seven areas considered by the act is "A Globally Responsible Wales", while another is a "Healthier Wales" (see image above).
The Future Generations Commissioner, Sophie Howe, wrote to Lee Waters, the Deputy Minister for Climate Change on the 31st March 2022 and 17th May 2022 asking "what the position of Welsh Government would be if it is indeed shown that the cancellation of the license is within your remit, and how the Well-being of Future Generations Act would be taken into account in such a case.". The Welsh Government is one of the two bodies Coal Action Network is taking to judicial review regarding Aberpergwm.
So far [31st May] there has been no response from the Deputy Minister. We will keep you posted if anything is received as the Commissioner puts the letters into the public domain.
If Aberpergwm were to be extended, the main consumer of the coal would be TATA's Port Talbot steelworks which is the biggest single source of carbon emissions in Wales. Just the act of mining the coal would release an unacceptable 1.17 million tonnes of methane, a greenhouse gas more powerful than carbon dioxide. At Coal Action Network we know that this coal must stay underground.
Last Thursday, 18th May, Coal Action Network protested outside of Lloyd’s of London, for their role in insuring the expansion of the Trans Mountain Pipeline (TMX) and the East Africa Crude Oil Pipeline (EACOP).
We built a fake pipeline outside Lloyds of London. Through previous actions outside Lloyds of London, we know that there are many sympathetic staff who do not support their workplace insuring the expansion of the Trans Mountain Pipeline and the East Africa Crude Oil Pipeline. Therefore we are asking staff to sign an open letter to John Neal, CEO of Lloyds of London. The letter demands that he make a clear statement that no Lloyd’s syndicate shall renew or provide insurance for TMX or EACOP, and implement a policy to stop the underwriting of fossil fuel expansion and other carbon-intensive projects by all members of the Lloyd’s marketplace.
We want to shed light onto Lloyd’s of London's appalling environmental record, and the colonialist practices from which Lloyd’s of London grew. From the insurance of slave ships, to the insurance of climate-destroying projects that dispossess indigenous peoples of their land, Lloyd’s of London have blood on their hands.
The TMX pipeline carries diluted bitumen, which is a fossil fuel and the expansion of it leads to further climate catastrophe for local communities and globally. The proposed expansion would transport an additional 590,000 barrels of oil daily, tripling its current capacity.
An increase of this scale cannot be justified at a time when leading scientists have made it clear that there is no room for any additional fossil fuel infrastructure, nor considering the devastating impacts of tar sands specifically. To meet the urgency of the climate crisis, we need to unite together and take action to increase the pressure like never before. In the run-up to Lloyd’s of London’s AGM we have been asked to help indigenous Land Defenders in Canada to cut off insurance to the Trans Mountain Pipeline.
“The Trans Mountain tar sands pipeline threatens my nation and our sacred Sleilwaut (Burrard) inlet; our place of creation. The pipeline poisons our clam beds and violates the rights of many Indigenous communities along its length and at its source. Expanding tar sands extraction and increasing the capacity of the Trans Mountain pipeline network is nothing less than climate destruction,” said Kayah George of Tsleil-Waututh Nation and Tulalip Tribes. “The Lloyd's marketplace and syndicates like Arch urgently need to get the message: it’s time to move away from dirty fossil fuels and instead uplift Indigenous rights, a healthy environment, and a stable climate.”
Campaigning efforts to stop the insurance of the TMX pipeline in 2020 led to three insurance companies cutting ties with the pipeline: Zurich (the lead insurer), Munich Re, and Talanx. We are hoping to build on this momentum to drive away more insurers this year. Already this year specialty insurance and reinsurance firms Aspen Insurance and Arch Insurance have confirmed that they do not plan to renew their insurance of the Trans Mountain Tar Sands Oil Pipeline project when its current insurance policy expires this summer.
The confirmation sees 18 insurance companies that have either dropped Trans Mountain or vowed to rule out insuring the Trans Mountain Expansion Project as climate advocates call for the insurance industry to shore up climate strategies. Lloyd’s of London must follow suit.
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”.
Lloyd’s of London member Arch Insurance has committed to no longer insure the Trans Mountain tar sands pipeline after its current insurance policy expires this summer. Arch joins seventeen insurance companies, including fellow Lloyd’s syndicate Aspen most recently, that have dropped Trans Mountain or vowed not to insure the Trans Mountain Expansion Project.
Amid pressure from activists to break ties with the tar sands pipeline expansion, in an email to Coal Action Network, a spokesperson for Arch stated:
“We can confirm that Arch Capital Group Ltd, on behalf of its underwriting operations, will not issue any future insurance policies covering the Trans Mountain Pipeline.”
Trans Mountain experienced firsthand the impacts of climate chaos in 2021. Following historic wildfires in the summer, November brought extreme flooding and mudslides that shut down the existing line for three weeks. This resulted in over two months of lower capacity oil flow.
Flooding displaced over 14,000 meters of stockpiled pipe meant for the expansion, and the company had to use hundreds of meters of pipeline from the new construction project to repair the old line.
More than 18,000 people were displaced from their homes in the climate catastrophe.
Trans Mountain pipeline expansion faces severe flooding and river crossing risks which should make insurers run a mile.
Equipment and generators were submerged in the flooded Coquihalla River; then the storms of November 2021 hit, adding half a billion dollars to the project cost.
Despite this, TMX continues to operate recklessly in flood-risk zones according to Ian Stephe of the WaterWealth Project :
"The company is recklessly setting the stage for further problems at the Vedder River crossing in Chilliwack where the river overflowed dikes. The company filed a geotechnical report that was withheld during route approval hearings and that only finds this major river crossing feasible as planned based on assumptions that were outdated when the report was written and that remain unmet. As a community member with a long history on this project, I am concerned about the impacts from this pipeline on waterways, and insurers should be too."
Charlene Aleck of the Tsleil-Waututh Nation Sacred Trust Initiative raised the question; who will fund a project this as risky as TMX?
"As the 18th insurer to rule out Trans Mountain, Arch is confirming that fossil fuel projects without Free Prior and Informed consent are a material risk. Trans Mountain's steps to keep their insurers secret will not stop the momentum towards a safer and more just world. Trans Mountain is currently looking for more financing to continue construction, but who will fund such a risky project?"
According to the last insurance certificate with company names listed, Lloyd’s syndicates collectively were the biggest insurer for Trans Mountain. Chubb and Zurich were the biggest individual insurers listed providing coverage, but since then, both Chubb and Zurich have cut ties, making Lloyd’s a remaining top target.
By refusing to rule out Trans Mountain across its marketplace, Lloyd’s of London is failing its members and the millions of people whose lives are being destroyed by climate change. With their understanding of risk, why hasn't the industry taken action decades ago?
With Arch and Aspen cutting ties, Beazley and CNA Hardy are the prime targets for public pressure.
This could all be avoided if Lloyd’s ended insurance for fossil fuels across its marketplace.
Lloyd’s of London has increasingly been the target of protests in the UK for its connection to the pipeline in the lead up to Lloyd’s of London actual Annual General Meeting on May 19. Resistance has included 60 people from Extinction Rebellion blocking the entrances at their iconic headquarters last month and a climate memorial led by Pacific Islanders and youth strikers from climate change-affected communities.
Delayed by over a decade of powerful Indigenous-led resistance, court cases, corporate campaigning, construction mishaps, and cost overruns, TMX is on it's knees. Matt Reml, (Lakota) Mazaska Talks says:
“Thanks to the effort of frontline Indigenous communities and grassroots activists, Lloyd’s of London syndicate Arch Insurance joins a growing list of insurance companies committing to no longer providing insurance for the Trans Mountain tar sands pipeline. This is a victory for Indigenous rights, environmental and climate justice. It is time for the Trudeau administration to end the Trans Mountain pipeline."
The projected cost of the Trans Mountain expansion project has quadrupled, according to recent numbers from the Canadian Ministry of Finance. The current price tag is approximately CA$21.4 billion, and the federal government pledged that it would not provide any additional funding. This leaves the budget $8.8 billion CAD short, demonstrating overwhelming opposition and challenges to building oil and gas pipelines.
