Killing coal by private means
Coal has become the enemy of city-dwelling, affluent believers in global warming. Yet it continues to be cheap and available for many countries, especially China and India, that want to expand their power grids to raise their standards of living to a level approaching that of the warmists who insist that doom awaits if atmospheric CO2 levels rise. So how can the poorer countries in the world, whose governments insist on improving their citizens' lives with electricity now and worries about hypothetical assertions based solely on computer models later, be forced to comply with the elites' desires?
The warmists have discovered a way. Make insurance for power stations and coal mines unavailable, thereby making the risk of building or operating them unacceptable. That can be accomplished by getting the highly concentrated business of reinsurance to reject coal facilities.
Reinsurance is a business that spreads the risk of a large policy written by one company over a wide range of companies. It is, in other words, insurance for insurance companies that are unwilling to be exposed to a huge liability if a specific policy – for instance a quarter of a billion dollars policy on a bog coal-fired generating plant – results in a claim (for instance, hypothetically, if anti-global warming extremists were to blow up a plant). If an insurance company can't reinsure a large policy it wants to write, then it cannot proceed to offer insurance.
The reinsurance industry is falling in line. The largest reinsurance company in the world, Munich Re, has just announced that it will no longer reinsure coal mines and power plants and will also not invest in the bonds or shares of companies that generate 30% or more of their sales with coal-related business.
Munich Re (MUVGn.DE), the world's biggest reinsurer, will stop investing in bonds and shares of companies that generate more than 30 percent of their sales with coal-related business, its chief executive said, caving to pressure from investors.
"In the individual risk business, where we can see the risks exactly, we will in future in principle no longer insure new coal-fired power plants or mines in industrial countries," Joachim Wenning added in a commentary to be published in German daily Frankfurter Allgemeine Zeitung on Monday.
The capitulation of the industry leader caps a successful campaign that already persuaded the number-two competitor in the reinsurance industry to comply:
Swiss Re (SRENH.S), world number two by share value, said in July it would not reinsure any company for which thermal coal represents more than 30 percent of its business, following French peer Scor (SCOR.PA).
It is clear that pressure was brought to bear on Munich Re, because earlier it had refused to follow Swiss Re:
Despite being a vocal supporter of the Paris deal, Munich Re had said as recently as last month that it did not plan to copy Swiss Re in limiting its underwriting of coal companies.
It's clear that President Obama's promise in 2008 is being fulfilled by big-money financial elites in Europe:
If somebody wants to build a coal-fired power plant, they can. It's just that it will bankrupt them...
Hat tip: John McMahon