Funding Curbs Won’t Slow Coal Comeback

Coal use continues to rise despite recent announcements that development banks will no longer fund the technology

For those concerned about the impact of coal-burning power plants on the world’s environment, the good news seems to have been arriving thick and fast lately.

In mid-July, the World Bank announced it was significantly scaling back funding for coal-fired power stations due to concerns about emissions and global warming. In future, said the bank, it would limit such financial assistance to “only rare circumstances.” Then the US Export-Import Bank announced it had decided not to support funding for a multi-million dollar coal-fired power plant in Vietnam.

A few days later the European Investment Bank – the world’s biggest public bank – followed the World Bank’s lead, introducing new lending criteria which, if properly implemented, would rule out future financial support for lignite and so-called “dirty coal” power plants. There were also indications the European Bank for Reconstruction and Development could be bringing in coal-lending restrictions.

Dark cloud?

But, as a pessimist might say, every silver lining has a dark cloud attached to it.

Coal is the most polluting of fossil fuels and, according to the International Energy Agency, accounts for about 45 percent of global energy-related CO₂ emissions.

A big test of the World Bank’s resolve will likely be made early next year when it will decide whether to give funding guarantees to a highly controversial power plant using “dirty” coal in Kosovo.

The European Investment Bank’s new criteria on coal lending – tied to specified limits on fossil fuel power plant emissions – have been criticized as being too generous to polluters, while the U.S. Ex-Im Bank continues to back coal-fired power stations in many parts of the world.

And then there’s the bigger picture: The world is using coal for energy generation like never before, and projections are for consumption to grow by at least a third by 2040, possibly by a half if the worst case scenarios are fulfilled.

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