Some of the largest lenders in the U.S. are preparing to take over oil and gas assets facing bankruptcy in order to avoid losses in energy company loans.
According to Reuters, JP Morgan Chase & Co., Wells Fargo & Co., Bank of America Corp. and Citigroup Inc. will each set up independent companies to own and operate $200 billion in assets.
Currently, energy companies are in the middle of a plunge in oil prices caused by the COVID-19 pandemic and an excess in supply.
Assets have declined in value, and some companies have said they may be unable to repay loans. If banks do not keep bankrupt assets, they may have to sell them off at greatly reduced values.
U.S. oil and gas producers have relied on banks for funding as debt or equity options have dried up.
Meanwhile, investment in renewable energy has increased.
JP Morgan Chase seeks to invest $200 billion in lending and other financial services for green and sustainable companies and projects. In October, Wells Fargo entered into a 10-year deal with Texas-based NRG Energy to power 400 locations in Texas with solar energy.
While other states have recognized renewable energy as a future economic driver, Indiana remains committed to coal for the foreseeable future.
A bill authored by Rep. Ed Soliday, and recently signed into law, sought to slow the rate at which the state transitions away from the 19th-century power source.
House Bill 1414 creates regulatory hurdles for electric utilities seeking to retire coal-powered electricity plants.
Soliday argued that slowing the rate of coal plant retirements was necessary to safeguard Indiana’s power grid and protect coal miners.
As of 2018, 70% of Indiana’s electricity was still generated by coal, but only about 2,500 coal miners were employed in the state.
Soliday has been the chairman of the Indiana House Utilities, Energy and Telecommunications Committee since 2018. In 2019, his political committee reported receiving $1,000 contributions from coal companies and political action committees like the Indiana Coal PAC, which represents nearly all coal production in Indiana; Sunrise Coal LLC, Indiana’s second-largest coal producer; and Alliance Coal PAC, which represents the Alliance Resource Partners, LP, the parent company of Gibson South Mine operator, Gibson County Coal, LLC.