Over the last eight years, as the scope of the climate crisis has deepened, nations of the world and particularly of the G20 and G7, have made repeated clear commitments to both fight climate change and end fossil fuel subsidies. Virtually all nations have made commitments to limit global temperature rise to 2°C (3.6°F).
And yet, billions of dollars’ worth of government support continues to flow towards fossil fuels and, incredibly, towards coal. This government financing for coal — largely in the form of export support, but also as development aid and general finance — is perpetuating coal use and exacerbating climate change. It needs to stop, immediately.
The full extent of government financing for coal overseas is not common knowledge, and is revealed in this report for the first time. A very large amount of public financing has been flowing to coal projects around the world. Our analysis finds that public finance has played a significant role in supporting coal projects over the last 8 years. Between 2007 and 2014, more than US $73 billion — or over $9 billion a year — in public finance was approved for coal.
This funding is being provided by a handful of countries that continue to resist pressure to end this public financing. Japan provided the largest amount of coal financing of any country, with over $20 billion of finance from 2007 to 2014. In the OECD, Korea and Germany were the next largest sources of funding for coal. Japan, Korea and Australia are leading the opposition to limits on coal finance in international discussions.
Combining all known public sources, and augmenting them with subscription industry databases, this report makes comprehensive information on public financing for coal easily accessible for the first time. This resource will be updated on an ongoing basis and will be made available online at: www.ShiftTheSubsidies.org/coal.
Key findings include:
- International public finance for coal is responsible for as much pollution as the nation of Italy. Total greenhouse gas (GHG) emissions related to the international public finance for coal between 2007 and 2014 conservatively amounted to almost half a billion tons of carbon dioxide equivalent (CO2e) per year. Emissions are close to a total of 18 gigatonnes for the entire lifetime of the supported power plants alone.
- OECD Export Credit Agencies are the biggest part of the problem, and their support for coal has been increasing: they have become the last resort source of international public funding for coal from rich countries. Nearly half (47 percent) of the total international finance for coal came through Export Credit Agencies in countries that are members of the Organisation for Economic Co- operation and Development (OECD), OECD Export Credit Agencies also fuel the bulk of related greenhouse gas emissions (44 percent).
- Governments — particularly Japan, Korea and Australia- are placing the corporate profits of their own coal companies above the interests of the global climate. Export Credit Agencies do not have development mandates. Their purpose is to help domestic companies to export. Those institutions that do have development mandates, Multilateral Development Banks and aid agencies, are rapidly reducing their coal lending. It is also worth noting that Germany, as one of the largest coal financiers, has not committed to end its export financing of coal plants in its recent national position, although they have for their aid agencies, and are phasing out their own domestic subsidies for coal.
- There are bright spots, and champions in the fight to end coal public finance. The United States and France are clear leaders in this arena. Multilateral Development Banks, led by the World Bank, have also sharply reduced their coal support in recent years. This is significant recognition of the need to end public support for coal.
- China and Russia also provide significant support for the coal industry. It is not known if these countries are considering ending public support for coal. It is strongly suspected that our data for these countries (especially China) is incomplete.
To address climate change and improve transparency, governments should:
- Immediately end all international finance for coal, including via Export Credit Agencies, development banks and agencies, and state-owned banks, except for very rare circumstances to support energy access for the poor where no other option is available;
- Phase out international public finance for all fossil fuel projects, beginning immediately with projects focused on exploration for more fossil fuels; and
- Immediately disclose exhaustive data on public finance for the entire energy sector, given its high impact on climate change. Such disclosure should cover all financing – including all Arrangement and non-Arrangement transactions by Export Credit Agencies and information from majority 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 of each project).