Friday, July 26, 2013

European Investment Bank Cuts Funding for Coal-Fired Power Plants

The European Investment Bank (EIB) provides financing for the European Union and has recently announced its new policy to stop financing coal-fired power plants. This is a part of the European Union's clean energy plan to significantly reduce carbon emissions by 2030. The policy mandates that power plants that emit more than 550 grams of carbon per kilowatt-hour would no longer receive funding from the EIB.

Germany, however, did not agree with the decision and encouraged the bank to continue funding these power plants since Germany still heavily depends on energy produced by coal. After the 2011 Fukushima nuclear diaster in Japan, Germany began to shut down its own nuclear plants. They rely on coal for about 45% of their total power.

EU and US Cut Funding for Coal Power Plants
Coal Plant in China
The EIB plans to tighten its regulations within the upcoming years, pushing for 450 gCO2/kW as the EU strives to meet its carbon emissions goal.

The EIB has provided billions of euros to finance these power plants in the past and the new policy represents the EU's strict adherence to the battle against climate change.

We have seen similar policies taking shape in the United States as well, with Obama's new climate change plan. Obama posited that he would crack down on coal companies and restrict US funding of overseas coal plants. “Today, I’m calling for an end to public financing for new coal plants overseas unless they deploy carbon-capture technologies," stated Obama in his Georgetown speech. He plans on reducing carbon emissions by 3 billion metric tons by 2030.

The World Bank recently announced a major shift in how they fund energy projects. They stated they will only provide funding in "rare circumstances." The World Bank stated, "Considerations such as meeting basic energy needs in countries with no feasible alternatives to coal and a lack of financing for coal power would define such rare cases."  They are instead promoting measures to reduce carbon emissions in existing plants and seek to reduce the harmful effects of coal on a local and global scale.

The strategies of these new banks are certainly admirable but are currently facing opposition. Many of the power plants that would lose funding are overseas and located in developing nations, with poorer workers providing the labor. Coal is typically the cheapest form of energy for developing nations. If these plants were to shut down, developing nations would lose a source of power and employment.

World Bank president Jim Yong Kim made a comment about a controversial plan to build a lignite coal-fired power plant in Kosovo: "Climate change and the coal issue is one thing, but the humanitarian issue is another, and we cannot turn our backs on the people of Kosovo who face freezing to death if we don’t move in.”

While none of these policies are total bans on coal, they are steps in the correct direction and demonstrate the urgent need for a change in the way the world thinks about and uses energy.