In Germany, wind turbines are being torn down to make way for a coal mine — and RBC is financing it

Wind turbines are being dismantled to make way for a massive coal mine expansion in Germany, and Canada’s largest bank RBC is helping pay for it using “sustainable” finance.

The Garzweiler mine has made headlines around the world this year as the company expands the massive coal operation into a former village site. In protest, thousands of climate activists, including Greta Thunberg, occupied the village in January to slow the company down. But riot police were called in, hauled the protesters away and last month, nearby wind turbines were dismantled to make way for further expansion

RBC is financing German utility RWE to expand the Garzweiler coal mine, and although detailed terms of the financing remain unclear, the utility describes the money it receives from international banks as being “linked to sustainability criteria.” Sustainable finance is a quickly emerging field built on the premise that if a company adopts environmental, social or governance (ESG) targets and meets them, it can receive better interest rates from the banks.

Specifically, that means RWE receives more favourable terms for its debt if it meets certain targets. These include upping the share of renewable energy versus fossil fuels in its generation portfolio; reducing the carbon dioxide intensity of its plants; and reaching a certain level of capital spending classified as sustainable within the European Union’s definitions. Nowhere in RWE’s sustainability criteria is it required to actually reduce the amount of planet-warming greenhouse gas emissions it’s responsible for, which will ultimately reach the atmosphere and continue to bake the planet.

RBC’s financing of RWE is reminiscent of a 2021 deal where RBC, alongside other major Canadian banks, financed Enbridge to build new pipelines under the sustainability banner. That Enbridge deal helps RBC inch closer to its corporate goal of lending $500 billion worth of “sustainable” finance by 2025, a quickly approaching deadline, which as previously reported by Canada’s National Observer leads to pressure to ink deals that may not hold up to scrutiny.

In theory, sustainable financing is one way to drive the energy transition off fossil fuels by making cleaner investments more attractive, but because sustainable finance isn’t well defined, what counts as “sustainable” is often unclear and banks have used it to greenwash their investments, experts say.

“Expanding a coal mine when the world is trying to get off coal as quickly as possible is nonsensical,” Stand.earth climate finance director Richard Brooks told Canada’s National Observer. “To make it even worse, when you're tearing down renewables in the form of wind turbines to expand the coal that we should be getting off of, you're basically having a double impact in terms of heading in the wrong direction.”

The coal expansion was greenlit as part of a bargain between the country and the energy giant RWE, which is a publicly traded company owned by major investors rather than the German government. The deal essentially boiled down to letting RWE demolish the village of Lützerath to make way for its Garzweiler expansion in exchange for agreeing to an earlier coal phaseout date (2030 instead of 2038) and shelving separate expansion plans that would have required evicting people from five other villages.

Coal has been mined from the area for 100 years, and despite Germany’s planned phaseout of coal power, the Garzweiler expansion is needed, according to RWE, to “make optimal use” of the remaining coal fleet as Germany curbs gas consumption as the war in Ukraine drags on.

Climate advocates don’t see it the same way and accuse RWE and its financiers of fuelling the climate crisis at a time the climate science is clear fossil fuels must be rapidly phased out to have a livable planet.

“Canada actually has taken a leading role in trying to get the world to get off coal,” Brooks said, referring to the country’s role in founding the Powering Past Coal Alliance. “How can we then have our Canadian banks financing something that is opposite to what a country has declared?

“This is the root of the problem here,” he said. “We're saying one thing and our banks are actually doing another thing.”

Using financial data sourced from a Bloomberg terminal, Brooks examined the lines of credit RWE has for its operations and identified dozens of banks financing the company. The only Canadian bank on the list is RBC, which has financed coal, oil and gas companies to the tune of $340 billion since the Paris Agreement was signed in late 2015.

The data, seen by Canada’s National Observer, shows RBC has provided RWE with approximately $470 million, though detailed terms of the financing remain unclear.

As some banks adopt stricter policies to limit their fossil fuel investments, RBC has continued pumping cash into the sector. According to the data, at the end of July, the bank had invested $14 billion worth of deals with 97 fossil fuel companies this year, Brooks noted.

With RBC, “we're seeing the number of deals has increased [and] the amount of money going out to energy companies has somewhat decreased” from the same period last year, Brooks explained.

“The big areas of growth are in fossil gas. They jumped onto that bandwagon, they've signed a whole bunch of deals with LNG companies [that] are mostly building out fossil gas facilities in the Gulf Coast, primarily in Black and brown communities and less economically well-off communities,” he said.

A BloombergNEF study published in February that Brooks referenced found RBC’s ratio of renewable energy investments was below industry averages.

“For every dollar [RBC was] putting into fossil fuels, they were basically putting 40 cents into renewables and where we need to be at today is a four-to-one ratio — four dollars into renewables for one dollar into fossil fuels,” Brooks said. “So they're vastly off their target.”

RBC did not return a request for comment.