5 December 2021

OECD nations agree to end export credit support for unabated coal power stations

OECD nations agree to end export credit support for unabated coal power stations

BREAKING: Ahead of COP26 US, EU, Japan, Canada, Australia, Turkey, and others join UK in ending export credit support for most polluting projects

The global campaign to phase out unabated coal power received a major boost ahead of the start of the COP26 Climate Summit next week, after a coalition of many of the world’s richest nations today pledged to end export credit support for coal power projects.

The OECD announced it has brokered a new Arrangement on Officially Supported Export Credits, with Australia, Canada, the EU, Japan, Korea, New Zealand, Norway, Switzerland, Turkey, the UK, and the US all signing off on the deal.

The agreement effectively bans financial support for overseas coal power projects and will come into effect once participants complete their formal internal decision making processes, which are expected by the end of this month.

The OECD said the terms of the ban cover all officially supported export credits and tied aid for: new coal‑fired power plants without operational carbon capture, utilisation and storage (CCUS) facilities; and existing coal-­fired power plants, unless the purpose of the equipment supplied is pollution or CO2 abatement and such equipment does not extend the useful lifetime or capacity of the plant, or unless it is for retrofitting to install CCUS.

The news follows both the UK government’s commitment that its UK Export Finance (UKEF) body would cease support for new coal projects and China’s surprise announcement last month that it too would stop financing overseas coal plants – a move that experts predicted would drastically shrink the global pipeline of new coal projects.

The move was welcomed by the UK’s new International Trade Secretary, Anne-Marie Trevelyan, who writing on Twitter said she was “delighted that our international partners are following UKEF’s lead and ending export credit support for new coal-fired plants ahead of COP26”.

The deal comes amidst a frenzy of diplomatic efforts in the final run up to the COP26 Summit in Glasgow, with governments working to sign off a series of agreements and initiatives that are designed to ramp up climate action going into the talks.

Most notably, talks are continuing to try and ensure industrialised nations deliver on the pledge to mobilise $100bn a year of climate finance for poorer nations from 2020 – a target that many observers maintain has to be met if developing nations are to be convinced to sign off on a technical agreement on the enforcement of the Paris Agreement in Glasgow.

Insiders had expressed optimism that countries would increase funding pledges to a level where the target is met, but reports this week suggested negotiations were not yet finalised with the US said to be delaying an agreement over concerns financial pledges may have to be ratcheted up further to make up for previous funding shortfalls.

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