CREDIT: AP Photo/David J. Phillip
The Export-Import bank announced Thursday that it would join a growing number of U.S. and international lending banks in ending the financing of coal-fired power plants overseas.
The Ex-Im bank’s new guidelines regarding the financing of fossil fuel plants align with the U.S.’s new position on avoiding financing coal plants overseas, and stipulate that the bank will no longer fund “high carbon intensity plants” unless they are located in the world’s poorest countries where no other practical power alternatives exist or if they employ carbon capture and sequestration technology.
“Without guidelines or limits, ever-increasing numbers of new coal plants worldwide will just continue to emit more carbon pollution into the air we breathe,” Ex-Im Chairman and President Fred P. Hochberg said.
The Ex-Im bank joins several other major lending banks — including the World Bank, the U.S. Trade and Development Agency, the European Investment Bank and the European Bank for Reconstruction and Development (EBRD) — in shifting away from financing coal plants overseas. The EBRD cited coal’s impact on climate change as reasoning for their announcement.
“We cannot use carbon without having a thought about what the impact of climate change is going to be,” Riccardo Puliti, Head of the EBRD’s Energy and Natural Resources division told Bloomberg. “There is a climate-change problem, and there are actions to be undertaken in order to solve it.”
The Since 1994, the Ex-Im bank has spent about $3.4 billion on coal-fired power plants. That’s less than the World Bank, which spent about $5.3 billion, a value topped only by the Japan Bank For International Cooperation, which hasn’t announced an end to its coal financing.
Lending banks aren’t the only ones signing off on coal financing. Several other governments — including Britain, Sweden, Norway and Finland — have also pledged to halt their financing of overseas coal plants. This growing number of banks and governments could make a real difference in the future of overseas coal, Jake Schmidt, director of international climate policy at the Natural Resources Defense Council told Bloomberg.
“If these development banks show that they aren’t interested, then those projects have a much harder hurdle with the private capital market,” Schmidt said. “If they don’t fund coal projects, and these projects don’t get funding elsewhere, then the carbon pollution from these projects won’t occur.”
Still, the announcements don’t yet spell the end of new overseas coal plants. Last week, the Asian Development Bank announced it would be lending $900 million to finance a new coal plant in Pakistan, despite a “no” vote from the U.S. during the decision-making process. And though the recent banks’ and governments’ announcements mark a shift away from coal, this will not completely end coal financing — the Ex-Im bank’s new policy, for instance, doesn’t prevent the bank from financing new coal mines.