France makes a bold move on coal finance: Will other countries follow?
Euractiv.com, 11th September 2015, Pascal Canfin.
Pascal Canfin is Senior Advisor for Climate at the World Resources Institute. He was the French Minister for Development from 2012 to 2014.
President Hollande announced that France would no longer provide financial support for coal-fired power plants overseas unless they are equipped with carbon capture and storage (CCS) technology, writes Pascal Canfin.
This week, French President Hollande made a bold announcement, declaring that France would no longer provide financial support for coal-fired power plants overseas unless they are equipped with technology to capture and store the carbon dioxide emissions. His announcement follows in the steps of President Obama, who announced in 2013 a ban on support for coal plants overseas except in very limited circumstances, and provides a model for other rich countries who are dragging their heels on adopting similar bans.
Since last year, France, the US and the UK have been supporting a proposal at the OECD, the club for the 34 rich countries of the world, that would severely restrict OECD export credit agencies from financing new carbon polluting coal plants. Yet this proposal is being vigorously resisted by the governments of Japan, South Korea and Australia, who all have vested interests in promoting coal expansion.
Next week, a little-known working group within the OECD will attempt to negotiate, in private, this multi-billion dollar deal which has vast potential to either lessen or worsen the impacts of climate change.
Every year, OECD Export Credit Agencies (ECA) provide billions of dollars in financing to support their companies to do business overseas. Between 2007 and 2014, US$34 billion of this taxpayer money was used to support the world’s dirtiest energy source: coal. At a time when rich countries are reducing their dependence on coal-fired power, ECAs are throwing an expensive lifeline to this dying industry by financing risky projects that, if completed, would lock in decades of carbon pollution we cannot afford.
The OECD meeting will be preceded by an EU meeting to negotiate a single European position on the issue. Despite the European Union’s stated commitment to mitigating climate change, ironically there are countries in the EU, including Germany, who would much prefer to continue offering generous subsidies to their corporations to build more coal plants overseas. The European Union must show leadership by following France’s bold move and ruling out all support for coal plants overseas.
With the climate negotiations in Paris fast approaching, OECD countries can no longer get away with making strong domestic climate commitments while exporting pollution overseas. Coal plants already are responsible for more than 40% of carbon dioxide emissions globally. There is simply no room in the carbon budget for new highly polluting coal plants: the continued drive to build more coal will push our planet towards climate catastrophe.
Many of the projects supported by ECAs are not just bad for the climate; they are bad for local communities and bad for business. Large coal-fired power plants, particularly in Asia, pollute the air and water, kill hundreds of thousands of people per year, and face strong opposition from local communities. They are also notoriously bad investments, with projects like the Batang coal-fired power plant in Central Java (Indonesia) years behind schedule as farmers refuse to sell their land.
Japan likes to claim OECD finance is necessary to promote more efficient coal plants, but this is simply wrong. There is no such thing as a clean coal plant. No matter how efficient coal plants are, they still produce 20-80 times more carbon pollution than renewable energy systems. Moreover, recent research shows that Japanese-financed coal plants are actually less efficient than the worldwide average, and that they often fail to deploy the most modern pollution controls, putting lives at risk.
Instead of investing in backward-looking coal technology, rich countries should be financing the cutting edge clean energy technology that can build a sustainable future for everyone. With the cost of renewable energy now at parity or even cheaper than coal in many parts of the world, clean energy is not only the best fuel for the climate, it is also the best fuel for the economy.
2015 could be the turning point for our planet. The concentration of carbon in the atmosphere has reached 400 parts per million for the first time, resulting in many more catastrophic extreme weather events and leading our planet closer to climate chaos. But hope is also growing worldwide as countries put forward ambitious commitments leading to the climate negotiations in Paris.
The government members of the OECD Export Credit Group have a choice before them that will affect us all. Will they keep subsidizing the businesses that put us all at risk, or will they show the leadership necessary to secure a strong agreement in Paris by ending support for coal plants overseas? The answer should not be decided behind closed doors