Goldman Sachs made a bold move on Twitter on Tuesday, sending out a “sponsored tweet” touting their efforts to promote wind energy in Brazil. “#Sustainability,” the multi-billion dollar global investment banking corporation said. “See how w’re [sic] helping scale clean energy.”
The bank says it is helping advance clean energy by acting as the financial adviser to the shareholders of wind energy company Bons Vento during the company’s $541 million sale to Brazilian electricity generation and distribution utility company CPFL Energias Renováveis. It is important to note that Goldman did not invest in the wind company, nor did it pay the $541 million to sell it. Rather, its financial adviser services will enable the wind energy company “to benefit from CPFL Energias Renováveis’ strong management team, operational expertise and greater financial capacity to help further scale clean energy.”
Contrast that to the Rainforest Action Network’s most recent Coal Finance Report Cards, which cite Goldman as large supporters of both mountain-top removal (MTR) coal mining and coal-fired power plants.
The process of MTR uses explosives to blow up mountains in order to access coal reserves, forcing rocks and soil into valleys and increasing concentrations of mercury and arsenic in water supplies. Until this year, Goldman did not have any policy statements addressing the issue of MTR mining and its associated risks, while doing business in 2011 with Arch Coal and Alpha Natural Resources — the two largest MTR companies.
Now, Goldman does have a due diligence policy for MTR transactions, which states that “we review companies’ environmental, health and safety track record, regulatory compliance, litigation and local community issues, remediation methods, and impact on water quality.” In 2012, Goldman financed both Alpha and Walter Energy, which cumulatively produced 29.42 percent of MTR coal mined in Appalachia that year, the RAN’s report said.
In terms of coal-fired power involvement, Goldman provided $252 million in financing “as a lead arranger or lead manager in transactions” with coal-fired power companies profiled in the RAN’s 2013 report. Coal-fired power companies financed by Goldman include American Electric Power, Berkshire Hathaway, Duke Energy, Energy Future Holdings, FirstEnergy, NRG Energy, and the Southern Company.
Goldman has recently indicated that the “window for profitable investment in coal mining is closing,” saying in a recent research paper that that competition from gas and renewable energy is slowing down the market; environmental regulations are discouraging coal-fired generation; and that improvements in energy efficiency are making investments there more viable.
But Goldman’s pessimistic view of coal, according to its paper, is not based around a belief that action to address climate change will stop the coal market. In fact, the paper said, “climate change has been displaced by other issues as a top concern.” However, the bank said “a catastrophic weather event such as an ice-free summer at the North Pole, a particularly destructive hurricane season in North America or a weather disruption that materially impacts agricultural output. Under such a scenario, governments may be forced to respond with drastically tighter environmental regulations that would further erode the long term demand for coal.”