Paris, 4 November 2021: Just Finance International today branded a revised OECD agreement intended to restrict export credit to support international coal-fired power plants as “full of loopholes”, as it allows continued pollution of the global environment.
In practice, the new agreement – a revision of a 2015 agreement and effective as of 1 November 2021, means that already financed coal-fired power projects can continue to pollute the environment, while the exit from coal-fired power generation is delayed beyond what is necessary for the reduction of climate-warming emissions. Research from Just Finance International’s recent (updated 2022) legal memo on Chinese investment in Serbia demonstrates how dirty and corrupt coal power, mining and transport is, with coal mining affects the quality of air, water and soil, causing serious illness to the people living and working in affected areas.
“While the OECD’s agreement sends a major signal that the end of international export finance for coal is near, it represents only weak progress, leaves far too many loopholes and fails to put an immediate end to all international export credit financing to coal”, says Vanessa Buth, Campaigner for Just Finance International. “In particular, the OECD’s agreement still allows coal mining and transport to continue receiving financial support, despite the recent IEA report calling to end any new financing of fossil fuels, which is necessary for achieving net-zero by 2050”.
Photo: Wang (2014)
“By any measure, this outcome falls short of expectations, G7 countries must make good on their promise to end all new financing to coal-fired power, including transport and mining”, said Ms Buth. “In fact, it is high time to end all international public financing to all fossil fuel projects and invested companies.”
“Continuing to allow export credit support to coal mining and transport is in clear conflict with the Paris Agreement goals. Sadly, the national economic interests of some countries prevailed, denying a full phase out of export credit support to coal, whilst increasing the risks for affected communities as well as the risks we all face due to climate change”, she added.
The 2015 agreement prevented OECD-member export credit agencies from supporting coal-fired power plants that were less efficient unless they were in developing countries. The restrictions announced today will end export credit support for coal plants that do not have effective carbon capture, utilisation and storage (CCUS) equipment in place. Export of equipment for retrofitting plants with CCUS or reducing emissions continues to be allowed if the lifetime and capacity of coal plants is not extended. No details are provided as to what “reducing emissions” entails or whether or how this would be controlled. The new restrictions do not address export finance for coal mining, transport and related infrastructure.
“To have real impact on the climate and environmental footprint, Just Finance moreover recommends that OECD export credits also review the way how export finance is provided. In other words, environmental impact assessment standards applied to judge the approval of projects, monitoring standards of ongoing projects and transparency in reporting, as defined in the OECD Common Approaches, should be raised in order to incentivise sustainable export credit projects”, concluded Ms Buth.
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Just Finance works to ensure that the public budget spent globally on development and infrastructure finance is contributing to the advancement of sustainability for populations and the environment.
Notes:
[1] 2015 agreement reached at OECD to end export credit support for unabated coal-fired power plants (CFSU):
[2] Revised 2021 agreement reached at OECD to end export credit support for unabated coal-fired power plants:
