Some coal plant exports should get financial aid, says EU policy paper

Obwohl französische Banken in Industrieländern gegen Kohlekraftwerke kämpfen, finanzieren sie die Anlagen in Entwicklungsländern. [oatsy40/Flickr]

European makers of equipment for coal-fired power plants should receive financial help to export it, an EU discussion paper seen by Reuters says, in a clash with the bloc’s declared aim to lead the global fight against climate change.

Coal is the most polluting fossil fuel, emitting around twice as much carbon dioxide as natural gas when used to generate power.

As a result, the European Union is phasing out subsidies for domestic coal plants by 2018 and the European Investment Bank has set an emissions limit for the energy for which it provides preferential loans, meaning coal is excluded.

The United States, together with Britain and the Netherlands, has also pushed for a phase-out of coal export credits.

But the discussion paper drawn up by officials from the European Commission’s trade department proposes that export credits, or preferential loans, continue for more-efficient technology.

Ahead of UN talks in Paris late this year on a possible global deal on climate change, the paper suggests as a compromise eliminating finance for coal-fired plants that use the least energy-efficient technologies.

For the rest it proposes reducing the maximum length for repaying loans to eight or ten years, down from 12.

Environment campaigners say this is no better than business as usual because only the more efficient technology is exported, mostly to emerging economies, chiefly India.

“This is completely useless. The market has already determined that no one exports the least efficient technology,” Sebastien Godinot, an economist at the WWF environment campaign group, said.

Environmental campaigners fear that an industry push to support growth and jobs means any argument that supporting coal hinders other EU policy goals will be swept aside.

In a briefing paper on coal finance, the WWF said countries around the world provided 7 billion dollars over the period 2007-2013 for developing coal overseas. Of this, export credit preferential loans accounted for some 5 billion dollars, with Germany, followed by France, being the biggest provider in Europe.

France’s Alstom previously said the risk of removing subsidies is that countries with no limits on coal plant financing would step in and could use less sophisticated technology. It had no immediate comment on Thursday.

Siemens, another major European manufacturer of equipment for coal-fired power plants, did not immediately respond to a request for comment.

The European Commission, the EU executive, has a policy of not commenting on unpublished documents. 

Research published on 15 December 2014 showed that demand for coal in Europe was in decline after a temporary spike caused by low prices, high gas costs, and the partial shutdown of German nuclear plants.

Coal is the most polluting of all fossil fuels, releasing twice as much CO2 as gas to generate the same amount of energy, and contributing significantly to the greenhouse effect, global warming and climate change.

International negotiators at the Lima climate change talks last December agreed on a plan to fight global warming that would for the first time commit all countries to cutting their greenhouse gas emissions. 

The plan was hailed as an important first step towards a climate change deal due to be finalised in Paris next year. The proposals call on countries to reveal how they will cut carbon pollution, ideally by March this year.

>> Read: Lima climate change talks reach global warming agreement


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