The United States has reached an agreement with other countries to prevent the public financing of coal plants. The agreement will also limit the development of new coal technology. The American government has said that this is a major step forward before the upcoming United Nations climate change negotiations which will be held in Paris.
The deal has been accepted by members of the Organization for Economic Cooperation and Development (OECD). This represents the first time that a large group of countries have established common standards for coal subsidies. Estimates show that about 80% of coal technology that is currently being exchanged would become unable to receive financing with the agreement.
The final version of the deal still allows for the financing of more efficient coal technology, which is particularly critical for countries where many of the residents don’t have access to electricity. In places like Africa and Southeast Asia, there are countries that have more than 10% of households without electricity. These countries can be particularly dependent upon coal power.
Senior campaigner with Oil Change International Alex Doukas said, “I would describe it as a signal that coal is not welcome in a climate-safe future. But I do think that it’s been severely weakened by Australia and South Korea.” This is likely because many of their key trading partners are very reliant upon coal.
The agreement will go into effect in 2017, and officials will not be allowed to revise it for at least four years. Officials are worried about the fact that they will not be able to restrict access to countries with electricity rates of less than 90%. These countries are usually very reliant on coal technology that is known as “ultra-supercritical”. The new agreement will make it very difficult to further develop this technology.
Representative of the World Resources Institute Michael Westphal said, “Already the proposal has no restrictions on ultra-supercritical technology. Having no restriction on ultra-supercritical until 2021 seems like a very long time. Technology moves quickly, and that seems like a generation time for technology.”
Additionally, big names in the coal industry are also quite disappointed. CEO of the World Coal Association Benjamin Sporton recently said in a statement that high-efficiency coal technology still has a critical role in the world’s energy market. Countries that still use coal should be able to access the most environmentally friendly options possible.
Sporton said, “Export credits are a key mechanism to ensure that efficient technologies are utilized rather than cheaper but higher-emission coal plants. Restrictive funding policy that prohibits support for efficiency technology, such as ending export credits for coal-fired power generation, will directly impact economic development and undermines the OECD’s commitment to the proposed Sustainable Development Goals.”
Additionally, other officials are worried that the industry will just simply shift over to countries not in the OECD. Indeed, the agreement will likely just move the role of coal exporting from places like Japan to places like China.
So while the intentions of this bill are certainly good, it might have come just a few years too early. Time will tell if the agreement turns out to be a success.