“Financing for coal projects is drying up at ever increasing rates as more countries target zero carbon emissions amid an energy transition sweeping the world…

The exit from coal by big international banks and government-backed agencies, which has accelerated this year…

With insurance companies, banks and other financiers pulling out of coal “we are seeing a real tide of all these forces moving in capital markets,”…

“What’s changed more recently is we have seen China, Japan and South Korea all commit to net-zero carbon emissions targets,”

TOKYO (Reuters) – Financing for coal projects is drying up at ever increasing rates as more countries target zero carbon emissions amid an energy transition sweeping the world, participants at Asia’s biggest gathering of the coal industry said on Tuesday.

The exit from coal by big international banks and government-backed agencies, which has accelerated this year, is likely to push coal companies to use offsets to get funding and listed ones to go private to avoid shareholder pressure as the dirtiest fossil fuel is increasingly shunned.

With insurance companies, banks and other financiers pulling out of coal “we are seeing a real tide of all these forces moving in capital markets,” Lachlan Shaw, head of commodities research at ANZ, said at the virtual Coaltrans Asia conference.

“What’s changed more recently is we have seen China, Japan and South Korea all commit to net-zero carbon emissions targets,” he said.

Carbon trading and offsets will become important tools companies to get finance for new projects, so they “can go to the financial markets and say we have a package here that is totally offset from a carbon emissions point of view,” he said.

Shaw said he expects more public listed companies to go private as shareholders focus more on the risks to investments from coal.

Even cleaner projects such as a coal gasification plant in Indonesia under consideration by coal miner PT Bukit Asam will struggle to obtain finance, said Ben Lawson, vice-chairman of the Djakarta Mining Club and chief operating officer of PT Sanaman Coal Indonesia.

“Even though gasification is the cleanest way of extracting power or downstream product for coal, its still coal,” he told the conference. To get financing, “I think its going to be a hard sell.”

(This story refiles to correct spelling of Sanaman in second-last paragraph)

Bank of Montreal is winding down its U.S. oil and gas investment banking business and will focus on assets in Canada going forward, becoming the latest financial institution to cut ties with America’s beleaguered shale industry.

BMO said it has made “the financial decision for an orderly wind-down of our non-Canadian investment and corporate banking energy business.” Going forward, the company said by email, its capital markets energy business will be focused on Canada.

The company is eliminating about 50 positions in its investment banking group as part of the exit that was announced to staff on Monday, according to a person with direct knowledge of the situation who asked not to be identified because the information isn’t public. A handful of corporate bankers will manage BMO’s U.S. oil and gas loan book, the person said.

BMO is the latest bank to halt investment banking tied to U.S. oil and gas explorers, which even before the pandemic were facing pressure after years of generating meager returns. The move didn’t appear to be related to ESG concerns plaguing fossil fuel companies. America’s shale industry has been swept up in a wave of consolidation in recent months as the pandemic slashes oil demand, drags down prices and forces low-premium mergers. That follows years of lackadaisical M&A activity in the oil patch.