UK banks lead Europe in coal financing, report finds

UK banks have emerged as Europe's largest providers of coal financing1, channelling billions into the global coal industry despite climate pledges made at international forums like COP26. This trend contrasts sharply with many European counterparts, raising questions about the alignment of financial commitments with actual investment practices.

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The scale of UK coal financing

Billions channelled to the global coal industry

UK-based banks have provided an estimated $8.3 billion (£6.2 billion) in loans and underwriting to companies operating across the thermal coal value chain since COP26 in Glasgow in 2021. This figure positions UK banks as the largest national source of coal finance in Europe, significantly surpassing the $4.9 billion from German banks and $3.4 billion from French banks over the same period.

Globally, bank financing for coal remained broadly flat between 2022 and 2025, averaging around $117 billion per year, despite the commitments made at COP26. However, this aggregate stability masks a growing divergence within the banking industry, with some regions reducing their exposure while others increase it.

Key players: Barclays and HSBC's continued involvement

The increase in UK coal financing has been largely driven by Barclays and HSBC, both of which notably increased their support for the coal industry between 2022 and 2025. Barclays' coal financing increased by 34%, from approximately $1.2 billion in 2022 to $1.6 billion in 2025, making it the largest coal banker in Europe. HSBC's financing more than doubled during the same period, increasing from $200 million to $414 million.

Heffa Schücking, director of the Germany-based environmental organisation Urgewald, highlighted this discrepancy, stating, "Barclays and HSBC should explain why their financing is moving in the opposite direction to the rest of Europe".

Climate pledges versus financial realities

COP26 commitments and net-zero ambitions

Many financial institutions, including major UK banks, made high-profile net-zero commitments in the run-up to and during the COP26 climate summit in Glasgow in 2021. These pledges aimed to align financed emissions with global climate goals, typically targeting net-zero by 2050. HSBC, for instance, committed to phasing out the financing of thermal coal-fired power and thermal coal mining by 2030 in EU and OECD markets, and worldwide by 2040. A spokesperson for HSBC added that these commitments support the bank's ambition to align financed emissions in its portfolio with net-zero by 2050. Barclays stated it does not provide financing to companies that generate more than 30% of revenues from thermal coal mining or power generation.

Divergent trends: UK versus European banks

While overall financial flows from Britain-based banks to the coal value chain grew by 17% over the period since COP26, banks headquartered in the European Union significantly reduced their exposure. EU banks cut their annual coal financing by 46%. This reduction demonstrates that clear coal policies can disrupt the flow of money to the industry.

Understanding the drivers behind fossil fuel investment

The 'energy transition' argument from banks

Banks often articulate their continued involvement in fossil fuel financing within the context of an "energy sector in transition". A spokesperson for Barclays stated that the bank is "financing an energy sector in transition, providing finance to meet current energy needs and also financing the scaling of clean energy". They also highlighted facilitating more than $300 billion of sustainable and transition finance over the past three years, including investments in cleaner energy projects and climate technology.

HSBC noted that its financed emissions from thermal coal mining fell by 94% between 2020 and 2024. Its reported thermal coal financing exposures also fell from approximately $1 billion to approximately $0.5 billion over the same period.

Global context: Chinese and US bank contributions

The global landscape of coal financing is heavily influenced by contributions from Chinese and US banks, which have increased their support for the industry. Chinese banks accounted for 62% of the total global coal financing between 2022 and 2025, providing $289 billion, an 8% rise over the period. US banks provided $67 billion, a 23% increase. This indicates that capital is concentrating in jurisdictions where coal policies may be weaker or absent.

The path towards sustainable finance and clean energy

The continued financial backing of the coal industry by some institutions underscores a persistent "scarcity story" in energy. This narrative often suggests that current energy needs necessitate reliance on traditional, high-carbon fuels, even as climate goals demand a rapid transition. However, this perspective overlooks the immense potential of clean energy to meet and exceed these demands without the environmental cost. The challenge lies not in a lack of alternatives, but in the systemic changes required to shift financial backing decisively towards sustainable infrastructure.

Instead of managing scarcity, the focus must shift to creating a future where energy is so abundant it ceases to be a concern. This vision involves a fundamental rebuild of the energy system, prioritising clean, renewable sources. Companies like Fuse Energy are working to make this future a reality by building abundant, clean energy infrastructure. By focusing on delivering the cheapest, cleanest energy possible, Fuse aims to empower customers, enabling a world where individuals and industries can thrive without the environmental burden of fossil fuels. This approach offers a tangible, forward-looking solution to the energy demands that coal financing purports to address, paving the way for a more sustainable and prosperous future.

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