Nov 18, 2015 - 1:36pmThe Climate Institute said it was an encouraging sign that OECD countries, including Australia, will boost the examination of clean energy options and to focus their financial support for developing countries in cleaner energy innovations rather than highly pollution intensive coal fired plants.
“Encouraging poorer nations to look at clean energy alternatives before investing in traditional coal plants, and limiting OECD financing of highly polluting fossil fuel generation, can only help boost global clean energy investment”, said Erwin Jackson, Deputy CEO, The Climate Institute.
Overnight, OECD countries agreed to limit export credit financing to coal power stations in developing countries. Early estimates suggest that this agreement will cut around 80 per cent off the current pipeline of OECD export credit financing to coal plants. It was also agreed that, before any plants are financed, the country needs to undertake an analysis of clean energy alternatives, and assess the extent to which any investment is consistent with their climate change and energy policy goals.
The role of export credit agencies in coal financing has been on the agenda of the OECD for nearly two years. Export credit agencies are government agencies that provide government-backed loans, guarantees and insurance to companies to do business overseas in developing countries. While Australia's agency does not support coal power plant investments, for countries like Japan, they play an important role in financing billions of dollars’ worth of these projects in developing markets.
“Over the last few weeks, the Australian government has moved from outright opposition to an agreement to agreeing to supporting the outcome,” Erwin Jackson said. “While this is welcome, it is nevertheless disappointing to see that the government helped weaken the agreement to allow more, albeit limited, instances where older, more polluting, technologies can receive financial backing.”
This agreement builds on moves by the World Bank, the USA and the number of European countries to severely limit the financing of traditional coal plants in poor nations.
“This OECD agreement sets an important new benchmark where investors and countries need to look at more modern, cleaner alternatives first before jumping to older, dirtier technologies,” he said.
“These benchmarks and ever-tightening restrictions on coal fired technologies are an important trend that should continue across all investment platforms, including the Asian infrastructure Development Bank, which is now developing its protocols.”
Jackson noted that global investment in renewable energy, like solar and wind, already outstrips global investment in fossil fuels. He said the decision by the OECD overnight just serves to reinforce the worldwide trend towards investing in clean energy climate solutions.
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