Rich countries agree to slash export subsidies for coal plants

After a concerted push from the United States, members of the Organization for Economic Cooperation and Development agreed to slash subsidies aimed at exporting technology for coal-fired power plants.

The decision by the world’s wealthiest countries to eliminate export credits for the least efficient coal plants, which will take effect Jan. 1, 2017, and can be strengthened four years later, marks a major negotiating success for President Barack Obama’s administration in the runup to U.N. climate talks later this month. The U.S. and several other key global players — including France, the World Bank, the European Investment Bank and the European Bank for Reconstruction and Development — have already limited its export financing for coal plants and had been pressing other nations, including Japan and South Korea, to follow suit.

A senior administration official said that under the new rules, OECD countries would still provide export credits for coal plants using ultra-supercritical technology and help finance slightly less-efficient plants in the world’s poorest countries. But the policy would effectively cut off public financing for 85 percent of coal plants currently in the pipeline, he said.

Jake Schmidt, who directs the international program at the Natural Resources Defense Council, estimated that these export agencies typically fund between five and seven coal plants a year.

A large number of private banks follow the OECD guidelines for their own lending practices, he added, so the move could have “a ripple effect.”

“This agreement is a sign that using scarce public financing to support overseas coal expansion is coming to an end,” Schmidt said. “It will help spur more renewable energy opportunities by redirecting this financing toward climate solutions instead of climate destruction.”