
British billionaire Hohn launches campaign to starve coal plants of finance - colinprince
https://in.reuters.com/article/climate-change-coal-banks/british-hedge-fund-billionaire-hohn-launches-campaign-to-starve-coal-plants-of-finance-idINKBN20P0KB
======
dharma1
I think this is great. It's worth actually reading the letters -
[https://ciff.org/news/ciff-calls-leading-banks-and-
regulator...](https://ciff.org/news/ciff-calls-leading-banks-and-regulators-
end-coal-finance/)

He is asking for banks to publicly disclose their coal loan exposures and
significantly increase the applied risk-weighting of these coal loans. Sounds
prudent to me.

------
perfunctory
Divestment is one of the most effective ways to fight climate change. And
guess what, you can do it yourself too.

Shift your investments from fossil to green. If you can't find enough worthy
greens, shift it to anything else. Some say it won't impact your returns:
[http://www.lse.ac.uk/GranthamInstitute/news/the-mythical-
per...](http://www.lse.ac.uk/GranthamInstitute/news/the-mythical-peril-of-
divesting-from-fossil-fuels/)

Move your deposits and savings to a more sustainable bank. It's very easy to
do yet quite powerful
[https://fairfinanceguide.org](https://fairfinanceguide.org)

~~~
xyzzyz
This kind of “divestment” is doing literally nothing to fight climate change.
You’re just offering stocks in fossil companies at bargain prices, making them
more attractive to hold by increasing ROI. Nothing changes in real economy,
everything operates as usual.

~~~
bamboozled
Except you’re taking your money elsewhere and “investing” in future
technologies and providing them capital to grow and outpace fossil fuels ?

If the majority of money was locked up in coal, there would be no capital for
new types of power generation.

You’re argument sounds like it might even be crafted to make people think
divesting is pointless but it can’t be.

Money is actually finite and therefore can be distributed in different ways.

~~~
SifJar
If you're buying stocks (outside of an IPO), you're not actually providing
capital to a company though? You're just buying the shares from someone else &
somewhere back in the chain of ownership, _someone_ provided capital to the
company.

~~~
icebraining
You're paying off the early investors who funded that company, making similar
investments more attractive.

Plus many companies do raise money by issuing new stock after IPO, or buy
other companies with their own shares, and so a higher stock price benefits
them, even if you don't buy those particular shares.

------
turc1656
_" In his letter to Carney, dated Feb. 28, Hohn warned that British banks were
“highly likely” to suffer losses on coal financing as the cost of renewables
continued to fall and regulations on air pollution and carbon emissions
tighten."_

If that's the case then Hohn shouldn't even need to push this agenda at all.
Coal usage would go down dramatically naturally based on market competition
from renewables based on his own statement. Either he doesn't believe that, or
he does and there's something else going on.

~~~
dharma1
I think it's mostly to do with timing. What he is highlighting is risk
mispricing when it comes to coal loans (that aren't properly disclosed to
shareholders of banks). But the effects of this mispricing - and market
competition from renewables can take years to play out.

In the meanwhile, climate change doesn't wait - if we want to have any chance
of not going beyond widely accepted atmospheric CO2 limits, it's important no
new fossil fuel infrastructure is built.

------
xvilka
There are some countries like Australia and Japan that only increase
investment in coal mining and burning. It's hard to starve such a big
economies.

~~~
mariushn
After so many fires in Australia, how come there aren't any protests to
decrease coal mining? Yes, most of that is exported and producing money for
mining companies, which pay AU taxes and employ miners. But still, that's a
small fraction of AU population.

~~~
sjwalter
I was reading a book to my kids yesterday that had an opening rant about how
the wildfires over Australia are a massive problem and our forest management
system is a disgrace globally. Flying at 10000 feet led to coughing and
choking, seemed like it was everywhere in the country.

The author was Jacques Cousteau, the book was written in 1973.

Australia’s been dealing with giant wildfires forever. It’s not clear whether
the fires are getting bigger or smaller with time, what impact forest
management has in same, and whether smaller fires closer to population centers
get more press and then make it seem like the problem is worse when it may not
be.

Global heating is a slow burn, but we’re all poised to read any climate
tragedy on it.

~~~
gambiting
>> It’s not clear whether the fires are getting bigger or smaller with time

I'm pretty sure that it's very very clear that the fires are getting maybe not
bigger, but definitely more frequent. Sure 1973 might have had a fire as bad
as the one this year, the problem is that Australia is now expected to have
such a fire every year or even multiple times a year, instead of once a decade
or so.

~~~
sjwalter
This is largely a forest management issue and not one of global heating.

Forest management used to focus on eliminating fires entirely. This has the
impact of building up brush to the point where any fire became massive. They
thought they were reducing fires, but they actually just increased amplitude
and decreased frequency.

It’s kinda like dams for flood control, but with different time scales. A few
dams for flood control reduces flood frequency massively, and we build up
population centers in what was previously deserted floodplain. Then a flood
(dam failure eg Oroville came pretty close) has a huuuuge systemic and
possibly chain reaction, trading semiannual road blockages from minor flooding
into one Whoa Noah every hundred years.

~~~
bamboozled
This is incorrect.

You can’t manager a tinder dry forest with fire anymore because the droughts
and dry seasons are becoming hotter and dryer than in recorded history.

What land management would fix this issue because deforestation?

The only thing that probably needs to be reincorporated in Australia is
indigenous cold fire burns when the time is right.

------
_red
Sounds like coal is competing against his other investments. Pretty smart way
to dress up your self-interest as a virtue.

~~~
icebraining
Running businesses that pollute less than the alternatives _is_ a virtue.

~~~
frockington1
Until you've made energy so expensive lower class families get an extra
financial burden to handle

~~~
IshKebab
This such nonsense. Green tariffs (where 100% of electricity is from renewable
sources, and sometimes a bit of your gas is biogas) are essentially the same
price as non-green tariffs in the UK.

~~~
frockington1
And what about in Kazakhstan? Primary source of energy is from coal. Should we
let them freeze because they aren't as fortunate as you to live in the UK?

~~~
IshKebab
I don't see how that follows from anything I said.

------
Hitton
Or how to make investing into coal plants more profitable for those who don't
buy into this guy's campaign. One would expect this to reach Nash equilibrium
with barely any change.

------
justaguyhere
This is good, but I wish we aren't _so_ dependent on the largesse of
billionaires for every major, planet threatening problem there is to solve

------
ptah
coal miners should be encouraged to claim compensation as well:

[https://www.gov.uk/coal-health-compensation-claims](https://www.gov.uk/coal-
health-compensation-claims)

------
dgudkov
I hope re-education of the plant workers is part of this campaign.

~~~
m_eiman
Re-education of the would-be workers at future plants that don't get built?

In general, I'd say re-education is a job for the workers in question and
government.

------
RickJWagner
I doubt it'll work. If the business is profitable, capital will find a way to
flow to it.

~~~
2zcon
I didn't interpret the letter as laying out a plan that must work.

I understood:

\- If governments stop funding coal, coal goes down.

\- Governments are likely to stop funding coal.

\- Coal is likely to go down.

\- This risk isn't adequately represented.

------
ykevinator
Half of us don't acknowledge a problem.

------
jsjddbbwj
Nice, I'm sure many people will appreciate being out of a job.

~~~
_ph_
"Jobs" is never a great argument to defend a technology overtaken by
development.

It is an especially bad argument in this context, because not only is coal
endangering the whole society, but when we close down coal plants, we continue
to need electricity. So the coal plants are replaced, usually these days with
renewable sources. And those tend to be more labor-intensive than coal. So
"jobs" is actually a good reason to close down coal plants.

------
frockington1
Less privileged people who who rely on cheap but dirty energy will get to
chose between starving and staying warm. Renewable energy research being done
by these companies will cease to exist. This seems incredibly naive at best,
at worst it's intentionally malicious and devoid of compassion.

~~~
burkaman
The money that would have funded these plants is not just going to disappear.
And there is more than enough money going around to keep the poor warm and
fed. People in countries like South Korea and Japan are obviously not going to
starve if their central banks stop investing in coal.

~~~
frockington1
I'm not worried about South Korea and Japan. If you cut off funding to every
coal plant, massive regions of Africa, South America, and Central Asia will be
without any source of heat and electricity (or more likely they will just burn
something worse). I want to see renewable, but not at the cost of entire
nations going dark and freezing in the winter months

~~~
icebraining
Funding for operating existing plants comes from the clients and/or the
government, or possibly from bank loans for cashflow management. Investor
money is usually for funding new plants or mines.

The only reason most existing plants might close is if cheaper alternatives
provide a better service.

------
LatteLazy
He just has convince every other private investor, every government, every
bank and pension fund and the owners of existing plants to all agree.
Literally every single one.

~~~
diffeomorphism
Not really. You don't need to get anywhere close to 100% to effectively make
coal too expensive to be worth it. Even if he just convinces a few big ones
that will make coal operations more expensive, hence less attractive also for
other ones, hence more expensive... . Viscous cycle, virtuous cycle and all
that. To win you only need the price to increase to a higher level than
preferable alternatives and the market will do the rest.

~~~
LatteLazy
How does not being funded by a few investors etc make it more expensive to be
funded by others?

Remember, these projects are inherently very profitable because coal is cheap
and easy (and dirty, but dirty isn't a cost). If a big name won't invest for a
5% return, I'm sure 1001 small names will...

~~~
diffeomorphism
> How does not being funded by a few investors etc make it more expensive to
> be funded by others?

Supply and demand. If the number of investors goes down, the remaining ones
can charge higher rates. The 1001 small names would be stupid to invest for 5%
if they can get 6%. The coal company would build even more plants if it were
lucrative, but at 6% such and such big investment does not make financial
sense anymore.

~~~
99052882514569
It's self-correcting. At 6%, more interest will be shown by other sources of
funding, who will then enter the game and lower the interest rate as a result.

The world is awash with capital right now, money sitting around idle, looking
for a place to be invested. Just look at how much money is being thrown at
startups, how low interest rates are for countries who were bankrupt or on the
verge of bankruptcy <10 years ago. This scheme is guaranteed to fail right
now. Maybe in another credit crunch it has a chance?

~~~
diffeomorphism
That is not what "self-correcting" does.

Your argument does not show that it won't go up, but only that it won't go
from 5% to 15% but rather find some balance at, say, 8%. Mission accomplished,
coal is now at a disadvantage compared to what it was before.

> The world is awash with capital right now, money sitting around idle,
> looking for a place to be invested.

And considering that coal is not doing well (and thus has to offer higher
rates), much of that money will be invested elsewhere. Sure, some will still
be invested in coal but less than it would be if you didn't do that.

This type of argument pops up often: "but there is a small counteracting
effect, so it will balance out to not do anything". No, it does not work like
that.

~~~
99052882514569
>Your argument does not show that it won't go up, but only that it won't go
from 5% to 15% but rather find some balance at, say, 8%. Mission accomplished,
coal is now at a disadvantage compared to what it was before.

Or it will settle at 5.01% due to the fact that a middle eastern sovereign
wealth fund or two will be bigger than all investors who sign up to this
scheme put together.

>And considering that coal is not doing well (and thus has to offer higher
rates), much of that money will be invested elsewhere. Sure, some will still
be invested in coal but less than it would be if you didn't do that.

But that has nothing to do with global warming or ethics of coal. It's mostly
due to natural gas becoming so much more economical, which is mostly due to
the shale gas revolution. It's a huge benefit to the planet, but mostly an
incidental one. Of course politicians and energy companies will still use it
to pat themselves on the back very very publicly.

>This type of argument pops up often: "but there is a small counteracting
effect, so it will balance out to not do anything". No, it does not work like
that.

Depends on the scale of the pro-acting effect. My guess is that the effect of
'ethical investment' due to ethics/global warming alone, and not due to
fundamentals of energy markets that have to do with prices of natural gas,
will be close to zero. If I'm wrong, it'll only be because a majority of
investors who would have otherwise invested in coal (important distinction)
jump on board this campaign, or close to a majority.

~~~
diffeomorphism
> Or it will settle at 5.01% due to the fact that a middle eastern sovereign
> wealth fund or two will be bigger than all investors who sign up to this
> scheme put together.

Which did not sign up at 5%, but at 5.01% it is now totally worth it... . No,
it is entirely unreasonable to expect that _if_ the current large investors
drop out they will be more than replaced.

It might be the case and even likely that Hohn does not achieve the first
step, but _if_ he can convince a few large investors the effect will be much
bigger than 5.01%.

> If I'm wrong, it'll only be because a majority of investors who would have
> otherwise invested in coal (important distinction) jump on board this
> campaign, or close to a majority.

If "just", say, 10% jump on board, what then?

~~~
99052882514569
>It might be the case and even likely that Hohn does not achieve the first
step, but if he can convince a few large investors the effect will be much
bigger than 5.01%.

No, not a few. Most.

>If "just", say, 10% jump on board, what then?

Then it'll make little or no difference.

------
itg
I see nothing in the article about helping workers who would be out of jobs
when coal plants shut down. The headlines will read "Billionaire causes
thousands of blue-collar workers to lose their jobs".

~~~
_ph_
Renewables tend to to be more labor-intensive than coal. So switching to
renewables rather creates jobs. Besides the usual benefits of saving the
climate, keeping the air clean...

~~~
philipkglass
Renewables presently look more labor-intensive because they are still being
built at a rapid clip, whereas there are no coal plants under construction in
the US. "Coal power jobs" presently include only the permanent employment for
operating and maintaining plants that were built in the past, plus associated
mining jobs for fuel.

Most wind and solar jobs are temporary construction/installation jobs. It
takes a year or two for hundreds of workers to build a solar farm. Then the
site can operate for 20 years or more with just a handful of permanent
employees. Jobs in manufacturing the _equipment_ used for renewable generation
are steadier but also less plentiful. Factories for making batteries,
turbines, inverters, and solar modules are already thrifty with human labor
and becoming more so over time.

I actually think that these characteristics of renewable generation are
_benefits_ , overall. Aging populations benefit from technological
developments that enable the same material standard of living with fewer
prime-age workers. Low labor intensity also means that renewable electricity
prices can fall further until hitting a price floor set by the wages of plant
workers.

See a previous analysis here:
[https://news.ycombinator.com/item?id=13750787](https://news.ycombinator.com/item?id=13750787)

