Home›Commodities›Energy Transition›Bank of England to stop accepting thermal coal bonds a…

Bank of England to stop accepting thermal coal bonds as collateral

The change starts October, with the central bank saying thermal coal firms face potential financial risks tied to the shift toward net zero.

Reported · Written up by our desk · Energy Transition

Environmental groups have pushed banks to reduce exposure to fossil fuels for years, a campaign that has intensified since the Covid-19 pandemic and as governments accelerate moves toward renewable power. OilPrice reports the Bank of England is now adjusting how it treats thermal coal-linked assets in its lending operations.

In June, the Bank of England said it will no longer accept bonds associated with coal operations for key loan arrangements, and that the restriction will be enforced starting in October. The policy applies to the use of thermal coal linked bonds as collateral when commercial banks borrow from the central bank.

The Bank of England said the move reflects a view that thermal coal bonds are becoming too risky to sit on its balance sheet as markets prepare for a shift away from the dirtiest fossil fuel. In its policy statement, it warned that thermal coal companies can be exposed to potential financial risks connected to the economy’s adjustment toward net zero, OilPrice reports.

More like this

Sources