EU eyes export help for coal-fired power plants

Coal-fired power plant, Rybnik. Poland, 2010. [Bankwatch/Flickr]

European makers of coal-fired power plants could get financial help to export the equipment, according to a Commission policy paper, flying in the face of environmental opposition to any form of subsidy for coal.

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

As a result, the European Union is phasing out subsidies for domestic coal plants by 2018 in line with its efforts to take a global lead in the fight against climate change.

But a paper prepared by officials from the European Commission trade department says export credits, or preferential loans to help cover exports costs, should be continued for the most modern coal plant technology.

“It has to be recognised that at a global level, coal as an important source of energy production is not going to disappear immediately,” says the paper circulated among representatives of EU member states.

“The EU delegation would consider it logical to try to see how the OECD export credit community can create incentives to ensure that this continued use of coal as an energy source is at least done in the most climate-friendly way possible,” it said, referring to the Organisation for Economic Cooperation and Development.

The Commission, the EU executive, does not comment on unpublished documents.

Positive reactions

An EU diplomat, speaking on condition of anonymity, said the policy paper was informal, but had received positive reactions from “most member states”.

The diplomat added the OECD export credit group would debate the issue later this month. The Paris-based OECD was not immediately available for comment.

The size of the credits are not huge, but environmental campaigners say any financing for coal should stop.

In an April briefing paper on coal finance, the World Wildlife Fund conservation group said countries around the world provided $7 billion (€5.1bn) over the period 2007-2013 for developing coal overseas.

Of this, export credit preferential loans accounted for some $5 billion (€3.6bn), with Germany, followed by France, being the biggest providers in Europe.

Alstom of France, one of the EU makers of equipment for coal-fired power plants, said there was no contradiction with EU environmental ambitions.

Giles Dickson, head of environmental policies and global advocacy for Alstom in Paris, said countries with no limits on coal plant financing would move in to replace those who cannot provide export credits.

“They will fill the gap with technologies that may not necessarily be as efficient or as clean as other technologies,” he said. “The consequence could well be that the emissions go up, not down.”

EU wants to lead

The EU has sought to lead the global fight against climate change. It is likely to meet a 2020 goal to cut carbon emissions by 20% versus 1990 levels, but has yet to reach agreement on a suggested deeper cut of 40% by 2030.

Nations such as Poland, which is heavily dependent on coal for its own power generation, say there is no point in the EU, which emits only around 11% of all emissions, taking the lead until much bigger emitters such as China and the United States agree to cuts as part of a global deal.

The United States on Monday (2 June) went some way towards catching up with Europe by unveiling a plan to curb the amount of carbon dioxide the power sector can emit.

Its existing goal is to cut emissions by 17% below 2005 levels by 2020, equivalent to a cut of 3.5% below 1990 levels, but it is ahead of the EU in some respects as the United States has already promised to end funding for coal overseas.

Coal use has soared around the world, particularly in Europe, where its share of the power generation mix has increased at the expense of gas.

Coal-fired energy generation grew by 45% between 2000 and 2010 globally, far outpacing the 25% growth in non-fossil fuel generation over the same period, according to the International Energy Agency (IEA).

Some 60% of the new coal capacity has been ‘sub-critical’, the least efficient class of commercially available coal-fired generation technology.

>> Read: IEA: Coal use is spiking climate mitigation costs

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