Investment Bankers Are Now Waging the War on Coal

Now Goldman has also pulled its support for new coal. The bank has its own selfish reasons for this surge in climate spending. Among them: It is trying to move into consumer banking in the United States, and it is especially keen on capturing climate-concerned Millennials for its new online bank, Marcus. It wants to clean a corporate image that, 10 years after the financial crisis, remains tawdry to say the least. And it needs to recruit chipper young undergraduates (often from Harvard and Yale) to join its ranks—and, generally, today’s 20-somethings prefer to avoid complicity in the scorching of the sky. On top of all this, fossil-fuel stocks have systematically underperformed expectations this decade, and financiers are wary of those firms’ business suffering further under future climate policy.

But the bank’s self-interested motivations suggest that it may actually follow through on its stated policy. And the American banks that finance even more fossil-fuel projects than Goldman Sachs—JP Morgan Chase and Wells Fargo lead the list—share many of its concerns and vulnerabilities and, to some degree, touch even more consumers than Goldman does.

That is good news for the planet, probably, but not necessarily for the people who live there. Instead of a planned and rapid transition to a post-carbon economy, the world is now on track for a disorderly and uneven one. Bankers are running a process that policy makers would handle with more care. “Finance is now ahead of the politics,” Allan said. “And when finance is ahead of the politics, then we have a problem with the democratic and political control of the process.”

This state of affairs is especially dire for Americans, as our economy remains tied up in fossil-fuel wealth. So far, the federal government has avoided undertaking the kind of clean-energy industrial policy undertaken by China in this decade and by the European Union in the coming one. If President Donald Trump wins next year, it is unlikely the United States will pursue such a policy until at least 2025, by which time the global supply chain for all manner of green technology—from batteries to electric cars—will be essentially locked up.

And what of international climate diplomacy? Funny enough, there is already a climate treaty well suited to the herky-jerky decarbonization now happening around the world. It’s called the Paris Agreement. “The virtue of Paris is experimentalism and voluntarism,” Allan told me. “Paris is an admission that we can’t get the [UN] process ahead of the politics and economics of it. And the rapid progress on the politics and economics over the last 12 months shouldn’t be washed out just because the COP didn’t pan out.”

In other words, unlike the Kyoto Protocol—which deployed exactly the kind of cross-border carbon rules that flummoxed this year’s COP—the Paris Agreement said countries should just start decarbonizing, and try to get better at it over time. Not every COP will be productive or even inspiring, but over time, as capital changes hands and technologies improve and the public demands it, the global economy will move away from carbon.

Or at least that’s the hypothesis. Next year’s COP—and next year’s American election—will continue to test it. And there are some experiments that climate advocates would prefer not to run.

Robinson Meyer is a staff writer at The Atlantic, where he covers climate change and technology.