still backing coal

In April 2019 Singaporean bank DBS announced it would stop funding new coal-fired power stations globally. Despite this positive step, DBS’ updated coal policy allows it to remain involved in several proposed dirty coal power plants in Southeast Asia.

One of these plants is Van Phong 1 in Vietnam, which an international bank consortium that included DBS quietly and shamefully signed a loan the very same day the Singaporean bank said it was dumping coal.

Read Market Forces’ press release on the Van Phong 1 deal

DBS is reported to be considering financing at least 3.2 GW of proposed coal power in Vietnam and Indonesia. To adhere to the Paris Agreement, respect Singapore’s call to action on climate change, and help keep global temperature rise below 1.5˚Celsius, DBS should not support any coal-fired power projects which promote dirty fossil fuel technology in Asia.

DBS’ coal policy

On 19 April 2019, DBS published a statement on its website titled “Our Approach to Financing New Coal-Fired Power Plants”, saying: “…we have decided to cease financing new CFPP in any market regardless of the efficiency of technologies used, after honouring our existing commitments. The last of these existing commitments is likely to be completed by 2021.”

However, DBS hasn’t disclosed details about these existing commitments.

At the DBS AGM on 25 April 2019, DBS was challenged over its decision to continue to finance coal power.  While DBS claims that the scenarios it used are consistent with the goals of the Paris agreement, it uses the IEA Sustainable Development Scenario which targets a mere 50% chance of constraining warming to 2°C (rather than 1.5°C), relies heavily on unproven technologies and concepts in charting a course for reaching net zero emissions in the second half of the century.

Ultimately, the decision to exclude several new coal power plants from the policy may have nothing to do with science, and everything to do with the number of projects that DBS happened to be involved in at the time the policy was announced.

What’s in the pipeline?

DBS’ revised 2019 coal policy allows the bank to continue backing proposed power stations, totaling at least 3.2 gigawatts in Vietnam and Indonesia.

The potential emissions from these projects would have significant harmful impact on the people of those countries, greatly affecting their health and livelihoods. According to a Harvard study on premature mortality due to coal pollution, by 2030 Indonesia will have 24,400 excess deaths per year and Vietnam an 19,220 excess deaths per year due to coal pollution.

DBS’ role in helping expand the coal power industry also impacts on our ability to keep a global temperature rise this century below 1.5 degrees Celsius. As stated in 2016 by  World Bank president Jim Yong Kim: “If Vietnam goes forward with 40GW of coal, if the entire region implements the coal-based plans right now, I think we are finished.”  DBS would be contributing to this catastrophe by supporting the finance of 4.4 GW of coal-fired power capacity.

Vung Ang 2 (1200MW)

This Vietnamese power station located in the Kỳ Lợi commune, Kỳ Anh district, Hà Tĩnh province, Vietnam, is sponsored by One Energy Ventures (a 50:50 joint venture between Hong Kong-based CLP Holdings and Diamond Generating Asia (DGA), a subsidiary of Japan’s Mitsubishi Corp) and Refrigeration Electrical Engineering Corp (REEC). The technology type of this project may have been changed to ultrasupercritical.

DBS has been linked to this plant as a lender. See our webpage on Vung Ang 2.

Jawa-9 and 10 (2,000MW)

This prospective Indonesian coal-fired power plant will be located in Banten province. It is anticipated that ultrasupercritical technology will be used. The sponsors are Indonesian utility, Indonesia Power (a PLN subsidiary) (51%) and Barito Pacific (49%).

DBS is linked to this plant as a financial advisor. Final investment decisions are anticipated at the end of June.

Read more about Java 9 and 10

What should DBS do?

DBS should withdraw from the coal power stations listed above. Continuing to support these dirty projects risks its commitment to help keep global temperature rise to 1.5 degrees.

DBS should also revisit its coal policy in order to:

  • exclude all  financial support for all coal-fired power stations now
  • exclude all financial support to coal mines now.