SunWorks Inc (SUNWQ)

[markp1950]

With them talking about cutting Solar Subsidies, Coal fans better watch out!
Rich nations look to cut billions from coal subsidies
by Pilita Clark


The coal industry is facing a fresh onslaught as rich nations consider a bold plan to scale back the billions of dollars of support they pour into coal power plants worldwide.

Documents seen by the Financial Times show the US has struck a deal with Japan that would rein in export credit agency financing for coal, a leading source of the greenhouse gas emissions responsible for climate change.

The proposal will be debated at a meeting in Paris next week of the Organisation for Economic Co-operation and Development, which represents 34 mainly rich countries.

"It's a huge breakthrough," said one person familiar with the talks. If agreed by other countries, it would probably make the "vast majority" of about 1,000 planned coal plants ineligible for export credit agency backing, he said.

In a sign of the difficulties of securing approval, Australia and South Korea, both home to large coal companies, have produced alternative proposals that would not go as far as the US-Japan plan.

Jake Schmidt of the Natural Resources Defense Council, a US environmental group, described the Canberra/Seoul proposal as "a terrible sign" from countries that claim they want to deal with climate change.

"They are trying to stop the simplest way to deal with this problem, which is to minimise the public finance going to coal power plants," Mr Schmidt said.

EU countries are still working on their response to the competing proposals, according to people close to the discussions. The OECD secretariat has been hosting closed-door meetings for the past year in an effort to finalise common rules on restricting export agency coal financing. Next week's meeting is seen as the last chance of reaching a deal.

The US and some EU countries have been pushing for a deal to be sealed before delegates from nearly 200 na­tions meet in December in Paris to finalise a new UN climate change agreement.

Export credit agencies help companies do more business abroad in industries ranging from aerospace to energy, providing government-backed loans and other financial support for projects.

It is estimated that agencies from OECD countries channelled $34bn to coal power plants between 2007 and 2014, making these bodies a prominent target as climate change activists press for fossil fuel use to be phased out.

A number of large investors have already agreed to cut their holdings in coal companies over the past year.

But if OECD countries were to curb their export financing support for coal power plants it would add to the woes of an industry suffering from a glut in supply that has driven coal prices sharply down over the past four years.

The US and the UK have already agreed to rules limiting public financing abroad for coal-fired power plants.

Efforts to extend such rules in the OECD negotiations were initially hampered by opposition from Japan, the world's top public financer of overseas coal projects, according to a June report by environmental advocacy groups.

The compromise deal reached last month between the US and Japan would still allow export financing for the most efficient types of coal power plants, but restrict support for many dirtier, less efficient units. These rules would be reviewed from 2019, with the aim of phasing down support further.

The plans from Australia and South Korea would continue to allow export financing for some of the projects the US-Japan plan would rule out.

In the papers, Seoul says it shares the view that coal power plants need to be re­duced to counter climate change, but there should be more consideration for the energy welfare of developing nations.

South Korea's Ministry of Trade, Industry and Energy declined to comment. Greg Hunt, Australia's environment minister, declined to discuss Australia's specific position on the issue but said Canberra was not trying to obstruct a deal at the OECD talks.

Financial Times


Read more: http://www.afr.com/news/world/rich-nations-look-to-cut-billions-from-coal-subsidies-20151109-gkuxbb#ixzz3r2m72riX
Follow us: @FinancialReview on Twitter | financialreview on Facebook