Australia

Major insurer Suncorp vows to stop covering thermal coal projects

A power station in Victoria. Source: AAP

The latest announcement means there are now no Australian insurers willing to underwrite new thermal coal projects, experts and advocates say.

Insurance giant Suncorp has announced it will have no dealings with the thermal coal sector by 2025, leaving Australia with no major insurers willing to cover new thermal coal mines and power stations into the future, according to experts.

The company said on Friday that they do not "directly invest in, finance or underwrite new thermal coal mining extraction projects or new thermal coal electricity generation" and they will "phase out these exposers by 2025."

Suncorp added that its insurance and investment portfolio exposure to fossil fuels was already at just 0.5 per cent, but that it was working toward a full exit.

A Suncorp bank office in Brisbane.
A Suncorp bank office in Brisbane.
AAP

The announcement makes Suncorp the second Australian insurance company to promise an exit from the thermal coal market this year. In April, QBE announced it would stop offering new policies for thermal coal mines and coal-fired power stations and pull out of existing arrangements by 2030 due to climate change concerns.

Energy economist Liam Wagner told SBS News that these announcements were far from surprising. 

"Climate change is a very big deal and the coal mining sector is going to be greatly affected by regulatory changes in the future as a consequence, and the risk that an insurer would have to take on to ensure that particular company would be enormous," he said.

"Insurers are bookmakers and they want to ensure a good bet, and the coal industry, for power generation, is not a good bet."

Senior Researcher at the Climate Council, Annika Dean, told SBS News that Suncorp was the last major Australian insurer to announce that it will no longer underwrite, finance or invest in new coal.

Members of an environmental protest group Extinction Rebellion are seen marching during morning peak-hour in the central business district of Brisbane, Wednesday, July 17, 2019. (AAP Image/Dave Hunt) NO ARCHIVING
Members of an environmental protest group Extinction Rebellion march in Brisbane.
AAP

"It means that insurance companies are recognising the financial risks that thermal coal poses, both in terms of potential asset risks and reputational risks," she said.

"This basically means that coal-fired generators will not be able to get insurance post-2030. It sends a very clear signal to energy-generation companies that the future is not in thermal coal ... the future is in renewable energy."

Suncorp's announcement came about after an environmental lobby group that represents "approximately 0.01 per cent" of the company asked for a resolution for consideration at the company's September annual general meeting that would, if adopted, require Suncorp to more thoroughly report its fossil fuel exposure.

This group has been identified as Market Forces, an advocacy group that aims to prevent investment in projects "that would harm the environment and drive global warming".

“Suncorp’s dumping of coal means there is now not one single major Australian insurer willing to provide insurance for new, climate-wrecking thermal coal projects," Market Forces campaigner Pablo Brait said in a statement.

"Any company wanting to run a coal-burning power station past 2030 will now be unable to get an Australian insurer to back it. AGL and Origin might want to take note."

Dr Wagner said it would now be extremely difficult for any coal-fired power station to find insurance due to the "current global regulatory environment".

"Coal use and power stations have a very limited lifespan into the future, so why would any bank or any insurer want to be involved in a risky endeavour in underwriting or banking a project that has a limited life span and is going to be subject to significant regulatory change?"

Despite Friday's announcement, Mr Brait said the group would still be pursuing the resolution in September as they are seeking an end to support for projects relating to all fossil fuels, including oil and gas.

"While Suncorp’s progress on thermal coal is exciting, the fossil fuel sector is far broader and without action on oil and gas, there is a risk that Suncorp ends up trading one massive climate risk for another overtime," he said.

Suncorp said it would instead look to increase exposure to businesses that have a positive environmental impact, including renewable energy generation and technology.

"We review our approach annually and we continue to engage openly and constructively with our stakeholders as we work together to build the resilience of our business and the community," a Suncorp spokesperson said in a statement. 

Shares in Suncorp were down by 0.7 per cent to $13.53 at 1pm on Friday.

With AAP

Stay up to date with SBS NEWS

  • App
  • Subscribe
  • Follow
  • Listen
  • Watch