37 countries agree to end subsidies for coal-fired power plants


In support of efforts to tackle climate change, and in the context of the approaching Glasgow Climate Conference (COP26), ten countries and the European Union (27 countries) have agreed to end subsidies for coal-fired power plants.
These countries participate in the Organization for Economic Co-operation and Development Arrangements to ban “bank export credits” for coal-fired plants, installations and equipment for their power generation.
Specifically, the ban on “Officially Subsidized Export Credits and Assistance” will apply to: All new coal-fired power plants unless they are equipped with operational Carbon Capture, Use and Storage (CCUS) facilities.
The ban on official financing also includes all existing coal-fired power plants, unless the equipment fitted is intended to combat pollution or reduce carbon dioxide.
In addition, there is another condition: such equipment shall not extend the operational and useful life of the plant, nor contribute to the expansion of its capacity, or at least be intended to retrofit to install operational carbon capture, use and storage facilities.
The ban will come into effect once participants in the 37 countries have completed their formal internal decision-making processes, which is expected to end by the end of October 2021.
The participants in the ranking are: Australia, Canada, the European Union (27 countries), Japan, South Korea, New Zealand, Norway, Switzerland, Turkey, Britain and the United States.
This OECD “arrangement” is an “honor agreement” among the participants, consisting of six sections, four chapters, and 19 appendices on 131 pages.
The “arrangement” first appeared 43 years ago (1978), based on an export credit “consensus” agreed upon among a smaller number of OECD countries in 1976. Since then, the agreement has been developed and updated regularly to reflect the needs of the participants and market developments.
“The main purpose of the agreement is to provide a framework for the orderly use of officially supported export credits for coal-fired energy facilities, by including the largest number of financing banks, with the aim of promoting equal opportunities,” Lawrence Speer, head of the Public Relations Department at the Economic Cooperation Organization, told Al-Eqtisadiah. Encouraging competition among exporters on the basis of the quality and prices of exported goods and services.
To this end, the arrangement places restrictions on the formally backed export credit financing terms and conditions (repayment terms – maximum payment term, minimum installment rates, minimum interest rates) to be applied when providing export credits. The arrangement contains various provisions for transparency between participants to ensure that restrictions are effectively applied.
The arrangement applies to all officially backed export credits with a repayment period of two years or more. However, it does not apply to military equipment or agricultural goods.
Speer says: Some of the rules set forth in the arrangement are specific to specific sectors and are detailed in the sectoral appendices to the arrangement (called “sector understandings”).
There are currently six sectoral understandings covering export credits for ships, nuclear power plants, civil aircraft, renewable energy, rail infrastructure, and coal-fired power projects.


Please enter your comment!
Please enter your name here