China's Funding for Coal Draws Scrutiny as Climate Concern Grows
(Bloomberg) -- China's leading role in financing a wave of new coal plants across Asia is drawing fresh scrutiny as the world’s top climate scientists weigh calling for much deeper cuts in emissions.
China, India, Japan and the Philippines rank among the biggest investors in the 1,380 coal plants under construction or development worldwide, according to a study by the German pressure group Urgewald released Thursday.
The findings add to evidence that Asian companies, often backed by taxpayer money, are stepping up funding for the technology blamed for global warming. A panel of researchers convened by the United Nations next week will release its recommendations for how to limit temperature increases, detailing how to meet a commitment in the 2015 Paris Agreement where almost 200 countries agreed to slash use of fossil fuel.
“Every coal plant that goes online puts a new stumbling block between us and the Paris goals,” said Heffa Schuecking, director of Urgewald.
The report highlights growing scrutiny of the coal industry both by pressure groups and multinational institutions, most of which are working to rein in investment of the most polluting fuels and to promote alternatives. For now, China’s thirst for energy supplies is so strong it pushed up the benchmark coal contract to $100 a ton earlier this week, the most in five years.
Research groups like Urgewald along with CDP and Natural Resources Defense Council are gathering data detailing which companies have the most at stake from tighter rules on climate change. Bank of England Governor Mark Carney is leading a Task Force on Climate-Related Financial Disclosures prodding companies themselves to make transparent the risks they face from environmental rules.
Those efforts sprung up alongside work on the Paris climate agreement, a pact in 2015 where governments everywhere for the first time pledged to limit greenhouse gases. With global carbon emissions from fossil fuels at a record, policy makers are studying how to make quicker reductions and zeroing in on coal as their first target.
Utilities by 2030 would have to consume just a third of the coal they burn now to hold global warming since the start of the industrial era to 1.5 degrees Celsius (2.7 Fahrenheit), according to a draft of a report by the UN’s Intergovernmental Panel on Climate Change. That group of hundreds of top researchers is due to release a report on Oct. 8 in South Korea calling for a massive reduction in burning coal.
Coal currently feeds about 27 percent of the world’s energy demand. That proportion is likely to drop to about 22 percent in 2040 as governments move toward cleaner energy policy, according to the IEA, the Paris-based institution that advises governments on energy. The IPCC was considering a call for coal to supply no more than 7 percent by 2050.
Yet taxpayer funding for new coal plants is growing, according to a report earlier this year by Natural Resources Defense Council, which is based in New York. It found governments in the Group of 20 nations extended a record $13 billion for loans, credits and guarantees backing coal plants last year.
``There’s a huge amount of coal being built with foreign support, and unfortunately the global coal build-out has been largely overlooked as a major climate risk,’’ Han Chen, climate advocate at NRDC.
Export credit agencies such as the Japan Bank for International Cooperation, China Development Bank Corp. and Korea Trade Insurance Corp. were among the biggest supporters. The three biggest destinations for those funds were Indonesia, Bangladesh and Vietnam.
In the Urgewald report, which uses data from the pressure group CoalSwarm, many of the plants are due to be built in Asia. If they’re all installed, they would add 672 gigawatts to the global fleet of coal plants, an increase of a third, the group said.
The World Coal Association has criticized CoalSwarm’s data in the past, saying the actual number of plants being built is much more limited than the group’s data suggests. It cited the Platts World Electric Power Plant Database showing 74 gigawatts of coal plants underway in China, short of the 259 gigawatts that CoalSwarm counted.
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