France ends coal subsidies for developing countries amid fears of COP 21 failure

Coal remains important to the economic development of many countries. [oatsy40/Flickr]

France hopes its decision to end export credits for coal-fired power stations will breathe life into the sluggish international climate negotiations, which have all but ground to a halt in the EU. EURACTIV France reports

After nine months of hesitation, President François Hollande has made good on his promise to end subsidies for overseas coal-fired power stations without a carbon capture system.

“We will immediately end export credits for all new coal power stations that are not equipped with CO2 capture and storage mechanisms,” Prime Minister Manuel Valls said on Thursday.

This announcement was timed to coincide with the official launch of the national awareness campaign for the Paris Climate Conference (COP 21), at the French presidential palace on 10 September. Much remains to be done in the three months leading up to the conference, and many fear that negotiations are still moving too slowly to reach the target of keeping the global temperature rise below +2°C.

“We have made too little progress, still too little,” François Hollande said. He added that there was a “serious risk” that the COP 21 could fail.


The French announcement puts an end to several months of prevarication by the government, caused by concerns over the possible impact on jobs at Alstom, one of the country’s biggest energy companies and a large beneficiary of French export credits for coal projects in the global South.

Alstom’s argument against the government’s decision was powerful: its new coal-fired power stations in countries like China are the only ones that can be adapted with carbon capture and storage technology. For most coal-fired power station in the world, this is impossible.

>>Read: France may extend coal subsidies to save jobs

Environmental NGOs, which have been putting pressure on the French government to keep its promise since late last year, welcomed the announcement.

Concretely, it means that French public funds will no longer be used to support coal power stations “without CO2 capture and storage” systems in developing countries.

But this stipulation has worried environmentalists. Carbon capture and storage technology (CCS), meant to capture emissions from power stations to reduce their impact on climate change, is still in its infancy. Only a handful of such projects are currently operational.

“Manuel Valls gave no indication of what he means by carbon capture and storage technology,” said Lucie Pinson of Friends of the Earth. “He also failed to mention which countries may be excluded,” she added.

>>Read: EU paper calls for binding CCS targets by 2030

Public investment banks often provide exemptions for certain types of power station or certain countries whose economic development depends on coal.

Another concern raised by the NGO group Climate Action Network is that the French plan to stop export credits will not affect “coal mines or associated infrastructure”.

European breakdown

Negotiations in the European Union are ongoing, but progress is slow. Lucie Pinson said, “As France could not make a decision for several months, the subject of stopping export credits at a European level is complicated.”

In a press release, Climate Action Network stated that their NGOs were “calling on France to act without delay to improve the positions within the EU and shift the lines of the debate within the OECD on 17 September”.

>> Read: France to axe coal subsidies while EU stalls

Lacking a joint position on export credits, the EU has so far failed to impose itself at the OECD. The club of developed countries will adopt a position on the subject ahead of the COP 21. “France now has to uphold its position within the EU and the OECD,” Lucie Pinson said.

A consultation meeting is planned for 16 September in Brussels, where the EU will try to ensure that member states all hum the same tune at the OECD. Some OECD members, including Japan and South Korea, are ferociously opposed to any agreement to end export credits. 

While coal accounts for only a small part of the French energy mix, the country still subsidises coal energy abroad through public guarantees from the French export credit agency, COFACE.

The agency has guaranteed over €1.2 billion of coal projects since 2011, and was the fifth largest subsidiser of overseas coal energy in the OECD between 2007 and 2013.

The 21st annual meeting of the United Nations Framework Convention on Climate Change (UNFCCC) will take place in Paris in December 2015. This is a particularly important summit because the UN member states must agree on a replacement for the Kyoto Protocol, the international framework for reducing CO2 emissions between 2008 and 2012.

Reaching an agreement, whether legally binding or not, is the priority between now and December.

Significantly reducing global CO2 emissions will require cuts to coal power generation, the energy source with the highest greenhouse gas emissions. 

16 September: European meeting on export credits for coal

17 September: OECD consultation on export credit agencies' coal subsidies

30 November - 11 December 2015: COP 21 in Paris


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