Environmental organisations have criticised the Royal Bank of Scotland (RBS) for helping to provide loans of almost £16bn to coal-related companies over the last two years.

According to a report published by a coalition of environmental NGOs including Friends of the Earth Scotland and People & Planet which reveals the level of coal industry financing by UK banks in the last two years, RBS has lent money to the coal industry in more deals than any other major UK bank.

In response to the report's findings Friends of the Earth Scotland has criticised RBS and other chief UK banks, claiming that many of the loans were made to companies that have generated controversy for their environmental record.

Amongst these is energy firm E.ON with which RBS, HSBC and Barclays were involved in loans worth more than $70bn in 2007. E.ON is now planning to build the first new coal-fired power station in the UK for 30 years at Kingsnorth in Kent. The contentious plans have prompted thousands of climate change activists to gather at the site in protest over the last week.

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Amongst the other companies to benefit from RBS lending is Arch Coal, a firm which uses a coal mining practice called mountain top removal. It is claimed that the method, which has been condemned by environmental NGOs, destroys the tops of mountains and produces large quantities of toxic sludge. Arch Coal alone has been responsible for the disappearance of over 300,000 acres of biologically diverse hardwood forest through this practice, said Friends of the Earth.

Activists this week targeted RBS's premises in London in protest against the bank's financing of such companies.

Commenting on the report, Duncan McLaren of Friends of the Earth Scotland said: "Coal is just about the dirtiest, most inefficient fossil fuel there is. RBS is providing the financial means for companies to build new coal-fired power stations which don't capture their carbon emissions, and dig new mines all over the world, yet still refuses to disclose full information on the fossil fuel projects it helps finance, or to take any responsibility for the emissions that result.

"Just last week people came from all over the country to protest against the proposed new coal fired power station at Kingsnorth. If RBS and the other banks don’t stop financing such climate-trashing projects they risk a similar public backlash."

Bronwen Smith-Thomas, campaigns officer of student network People & Planet added: "Students across the country are demanding that RBS pull out of fossil fuels and focus their investments and experience into supporting renewable energy development. If RBS continues to fund climate change, students are prepared to boycott."

(GK/JM)