Some G7 Countries Still Providing Billions in Financing for Coal Plants: Findings from Our New Report
This post was cowritten with Jake Schmidt and Silvia Peng.
The Paris Agreement provides momentum to shift global resources towards low-emission and climate-resilient development. Unfortunately, continued government financing for international coal projects undermines that goal. To address climate change, governments must shift international public finance toward smarter, sustainable options. Japan, which will host the 2016 G7 meeting soon, continues to be the worst offender when it comes to public financing for international coal projects, providing $22 billion from 2007 to 2015. Germany comes in second, providing $9 billion during the same period. Japan not only financed $1.4 billion in coal projects in 2015 but is considering nearly $10 billion in future coal projects. See here for more on Japan.
Our analysis—co-written by the NRDC, World Wide Fund for Nature (WWF), Oil Change International (OCI), Kiko Network, Japan Center for a Sustainable Environment and Society (JACSES), and Friends of the Earth Japan—finds that between 2007 and 2015, the G7 countries have provided more than $42 billion of public finance for coal in the form of direct finance, guarantees, technical assistance, and aid for coal power, coal mining and related projects. (Our figures are likely an underestimation since it is based mostly on publicly available data and not all of these institutions are transparent.)
G7 nations are trying to sweep the coal financing under the rug by increasing coal financing through export credit agencies and other entities that provide limited disclosure on their projects. These are the among the findings of our report—Swept Under the Rug: How G7 Nations Conceal Public Financing for Coal Around the World. [Note we also released a detailed publicly available database (xlsx) of all these projects, including information on power plant size, location of the project, funding per project, and other data.]
While many countries have made public commitments to end most public financing of overseas coal projects in the lead-in to the Paris climate agreement, three countries—Japan, Germany, and Italy—continued to directly fund coal power plants. And amongst the G7 countries Japan continues to be actively pursuing projects.
From 2007 to 2015, channels for coal financing shifted from Multilateral Development Banks and toward Export Credits Agencies and other bilateral finance institutions, with the Japan Bank for International Cooperation being the largest financer among all institutions analyzed.
About 75 percent of all coal financing went to coal power plants. Others went to coal mining, transmission and distribution, emissions control, and other activities. What’s appalling is that Japan counts some of its coal projects as “climate finance.” Japan has counted $1 billion in loans for coal plants in Indonesia and is counting two coal projects underway in India and Bangladesh as climate finance because the plants burn coal more efficiently than older plants. Japan is the only G7 country attempting to pass off financing for coal as climate finance, undermining the principles of the Paris Agreement. Counting coal projects inflates Japan’s numbers so they appear to be a big financial supporter for climate action. In reality, the coal projects Japan is funding lock recipient countries into decades of coal use, and hazardous environmental and health impacts. Emissions from coal plants financed by G7 governments from 2007 to 2015 totaled 101 million metric tons of carbon dioxide-equivalent per year, which is the same as the annual per capita emissions in 2013 for 60 million Indians or 6 million Americans.
It’s time to stop using public finance to subsidize overseas coal projects. To address climate change and improve transparency, the report highlights the following recommendations:
- End international public financing for fossil fuels, beginning with coal power plants. G7 governments need to strengthen the OECD agreement and immediately end all international public financing for coal power plants, except for very rare circumstances in which no other option is available to provide immediate energy access in low-income communities.
- G7 governments must limit funding for all coal-related activities, not only for power plants. They must commit to ending international public financing for coal exploration, mining, and transport.
- Immediately disclose detailed data on public financing for coal, covering all relevant transactions by export credit agencies and information from wholly or partially state-owned banks on an annual, country-by-country, and project-by-project basis (including all project-level details necessary to provide a clear view of the climate and environmental impacts).