Energy in the News

Bank of America touts its eco-credentials but finances wrong projects

LISA ZERKLE

Special to the Observer

On April 1, Bank of America's Ken Lewis was honored in New York, site of the bank's new LEED-certified building. He said, "Helping our nation reduce greenhouse gas emissions, as well as encourage renewable energy and low carbon technologies, is not only the right thing for our planet, but it is also smart business."

Lewis was honored for signing The Carbon Principles. In the void left by lack of federal energy policy, financial institutions have developed this set of guidelines to evaluate the growing risk of investment in coal-fired power plants and other carbon intensive areas.

Banks are rightly concerned about future regulation costs with regard to "indirect emissions," that is, emissions of companies they finance. But these principles have no performance criteria. It's akin to someone on a diet reading Nutrition Facts before tucking into fettuccini alfredo. There's no accountability.

Lewis garnered another award on April 1: 2008's Fossil Fool of the Year from Rainforest Action Network. Lewis topped such notorious polluters as GM's Rick Wagoner and ExxonMobil's Rex Tillerson. Why?

BofA is "a leading green bank," according to its 2007 Shareholder Report which touts its eco-credentials, noting its sustainable development initiative, pledge to reduce its utility portfolio's CO{-2} emissions, and $3,000 employee incentive toward a hybrid car purchase.

What the report doesn't say is that BofA's financed emissions have increased by 11 percent since 2005, or that in 2006 it invested 100 times more money in dirty energy than clean. In 2007 BofA's utility portfolio was responsible for 765 million tons of CO{-2} -- more than 10 percent of the U.S. total.

While that annual report features soothing photos of forests, it says nothing of BofA's funding of the most heinous kind of coal mining, mountaintop removal (MTR). BofA finances the top five producers of MTR coal, including Massey Energy, which faces $2.4 billion in EPA fines. MTR blows up entire mountaintops, destroys habitat and taints groundwater. At BofA's shareholder meeting, a retired coal miner told Lewis MTR was "literally destroying Appalachia."

Money for coal-fired plants

The Department of Energy reported 151 new coal-fired power plants in planning stages by early 2007. In light of future carbon regulation, 59 plants have been abandoned. Fifty more are being challenged in courts. BofA provides financing to 31 utilities building new coal-fired plants.These plants, like the one currently being built by Duke Energy at Cliffside, will each generate upwards of 6 million tons of CO{-2} per year along with a host of other pollutants, over their 50-plus-year lifespan. Remember BofA's hybrid car incentive? In 2007 those cars reduced CO{-2} emissions by 1,800 tons. Emissions from the Cliffside plant alone will negate that reduction in 2.63 hours of operation. BofA was part of a lending syndicate that provided $3.2 billion to Duke Energy.

According to an Opinion Research poll, 75 percent of Americans would "support a five-year moratorium on new coal-fired power plants in the United States if there was stepped-up investment in clean, safe renewable energy -- such as wind and solar -- and improved home energy-efficiency standards."

An ad for BofA's new Manhattan building states: "At a traditional coal-fired power plant, about 66 percent of the energy produced is lost as heat ... another 7 percent of power is lost along the way. You pay for all of it, but receive just 27 percent of power generated. ... The Bank of America tower houses its own co-generation plant which is about three times as efficient. It captures the heat it generates and puts it back to work, converting it to energy that's used to heat and cool the building."

Focus on efficiency

Innovative efficiency and conservation, along with renewable energy, are promising investments. Dr. James Hansen, NASA's leading climate scientist, says, "There's so much potential in efficiency, we don't need new power plants if we take advantage of that." How much sooner would we get there if BofA funded 96 percent clean/4 percent dirty energy, instead of the 96 percent dirty/4 percent clean it currently funds? How much profit could be earned doing so?

Continued investment in dirty energy is not only bad for the planet, it's bad for business. It's not a matter of if carbon regulation will take place, but when. Wall Street has repeatedly downgraded rankings of coal companies. According to Environmental Leader.com, "Investors have filed 54 global warming shareholder resolutions with U.S. companies, doubling the number of two years ago." A congressional bill to ban new coal-fired power plants is pending. After enduring the 2008 mortgage crisis, can BofA afford the 2009 carbon crisis? Its current carbon-intensive investments expose shareholders to undue risk.

BofA can't be simultaneously "a leading green bank" and the "ATM of the coal industry." As Lewis says, "There is a huge economic opportunity embedded" in the shift to a green economy. Now if only the money will follow the marketing.

Lisa

Zerkle