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10th Dec 2022

EU nations climate-minded at home, but promoting coal products abroad

EU states like France and Germany might be talking up their climate-change-fighting credentials at home, but they are also helping companies export technology for power plants that run on coal, the most polluting of the fossil fuels.

EU taxpayers' money worth $3.8 billion was used as a guarantee for the construction of coal-fired power plants, according to a recently leaked document.

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While the EU has several policies in place aimed at reducing the emission of greenhouse gases on its territory, there are hardly any rules providing climate standards for projects supported by individual countries' export credit agencies.

These government agencies provide guarantees or preferential loans to companies that want to offer a service in a third country, improving their chances of clinching a business deal.

An internal document from the Organisation for Economic Co-operation and Development (OECD), a Paris-based research body, gave a rare insight into the amount of export credits given to companies that provide products for fossil fuel plants and extraction.

As recently as 2012, for example, France and the US provided a guarantee worth $1.1 billion for the "design, manufacture, delivery and assembly of the 6 turbine subunits of the Kusile coal-fired power plant" in South Africa.

According to the South African company in charge of the construction project, Kusile will be "the fourth-largest coal-fired power station in the world" and will be operational for sixty years.

Between 2003 and 2013, the 34 OECD countries provided export credits for coal-fired electric power plants worth $12.8 billion. Slightly less than a third came from EU countries, with France ($1.8bn) and German ($1.1bn) leading the pack. The largest providers in the OECD are South Korea ($4.1bn) and Japan ($3.3bn).

Twenty-one of the 34 OECD members are EU countries.

In 2013, US president Barack Obama called for an end to public financing of coal-fired power plants, and Washington has since tried to put the issue on the agenda during international negotiations with other OECD members.

A possible restriction on coal technology as a recipient of export credits was discussed during a meeting last Wednesday (4 March), but according to Sebastien Godinot, economist at environmental organisation WWF, an agreement is nowhere in sight.

“We know that Poland, the Czech Republic, as well as Australia, Japan, South Korea, and Turkey are opposing more or less any significant step forward”, Godinot told this website.

However, he added it is very difficult to learn where countries stand.

“They discuss behind closed doors, on agenda's which are not made public, with data which are not published, and they don't tell you what their position really is and what they support or oppose in the discussions.”

Some countries have expressed support for the US' opposition to public financing of coal, including the UK, the Netherlands, and more recently, France.

According to Godinot, the OECD and the EU are keen on achieving a deal on restricting coal financing this year, ahead of the global climate summit due to begin in Paris at the end of November.

The summit is aimed at creating a binding legal agreement between the world's countries to curb emissions.

“The rich countries are asking the poor countries to make some efforts. If they ask poor countries to make some effort, but still keep subsidising their own industry for national benefits, it's really selfish. In term of reputation, they look ridiculous”, said Godinot.

Germany led EU's $5bn coal splurge

A larger portion of EU taxpayers' money than previously thought was used in recent years to help build coal-fired plants, the dirtiest energy source.

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