World Economy

More Bad News for Coal Industry

More Bad News for Coal IndustryMore Bad News for Coal Industry

Japan and other members of the Organization for Economic Cooperation and Development will end public financing of coal-fired power generation in principle from 2017 to help rein in global warming, Japanese officials said Wednesday.

A working group of the OECD has agreed in Paris to restrict advanced nations from financing coal-fired power generation and other technologies that emit high levels of carbon dioxide in developing nations, AP reported.

“Climate change is one of the greatest challenges of our time,” OECD nations said in an official communiqué on Tuesday. “We reaffirm our commitment to rationalize and phase out fossil fuel subsidies that encourage wasteful consumption.”

Members will also consider strengthening the restrictions in 2019 by taking into account technological advances and research on global warming, they said.

The agreement adds impetus to the upcoming United Nations climate change meeting, slated for Nov. 30 to Dec. 11 in Paris, as members seek to decide on measures to reduce emissions from 2020 under a new framework with the participation of key economies such as China, the United States and India.

Withdrawing public financing for regular coal-fueled thermal power generation marks a major shift in Japan’s policy as it has pushed exports of coal-fired power units through both the public and private sectors.

The latest agreement still allows Japan to provide support for advanced ultra-supercritical power generation, which is considered a highly efficient form of coal-fueled thermal power generation.

The government welcomed the agreement, saying that promoting highly efficient coal-fueled thermal power generation was a realistic solution for combating global warming.

Together with South Korea and Australia, Japan initially opposed strengthening restrictions on gas-emitting technologies, fearing this could help non-OECD member China take over exports. But Japan changed its stance after talks with the US and other countries.

Japan and the US have already agreed to restrict export credits for constructing coal-fired power plants in developing countries.

Generally, coal-fired power generation emits roughly twice the amount of CO2 compared to natural gas. Because of its low cost, coal is attractive to developing countries.

A Japan-based network of groups involved in fighting climate change welcomed the agreement, but said it was only a first step. “Even the highest-efficiency coal power plants emit a lot of CO2,” said Kimiko Hirata, the international director of the Kiko Network. Kiko means climate in Japanese.

Major lenders including the US Import-Export Bank, the World Bank, and the European Investment Bank have already cut support for coal projects. The new agreement among the 34 OECD nations means countries including Japan and South Korea will for the first time restrict their funding as well. It’s more bad news for a coal industry already hit by slumping global prices, new environmental regulations and slowing growth in China.

According to an analysis by the World Resources Institute in Washington, some 1,200 coal-fired plants have been proposed for construction across the globe. More than three-quarters are in India and China.