The developed world is turning against coal and opting to fund more green power sources. The European Union’s finance arm announced on Wednesday it would stop financing most coal-fired power plants as part of Europe’s effort to fight global warming.
“Adoption of the new lending criteria represents an important step forward in the European Investment Bank’s commitment to energy investment that supports EU policy and reflects the urgent investment challenges currently facing the energy sector,” said Mihai Tanasescu, the EIB’s vice president for energy lending.
This move comes in the wake of other major announcements by President Obama and international finance agencies to stop funding coal-fired power plants, especially in developing countries which rely on coal power the most.
Last week, the World Bank announced it would stop financing coal plants in the developing world unless such plants are needed to meet basic “energy needs in countries with no feasible alternatives.”
The U.S. Export-Import Bank board of directors also voted last week not to finance a 1,200 megawatt coal plant in Vietnam, echoing the president’s promise from earlier this summer to stop international financing of coal projects as part of the U.S. effort to address global warming.
“Coal has been vital to global development — almost half of this century’s incremental energy has come from coal alone,” said Milton Catelin, chief executive of the World Coal Association, adding that coal power has helped lift millions out of poverty.
“If coal-fueled China were taken out of the equation, the number of the world’s poor has actually risen since the 1980s,” Catelin added. “Virtually all of the world’s poverty reduction between 1981 and 2008 took place in China. No other poverty alleviation strategy in modern history has been more effective than the one implemented by China and driven by an economy fueled at over 70 percent by coal.”
The EIB’s plan makes coal plants ineligible for funding unless they emit less than 550 grams of carbon dioxide per kilowatt hour, however, this emissions cap could be tightened in the future.
Reuters reports: “An emissions cap of 450 g/KWh would mean that older, inefficient gas plants would also be ineligible for funding. The cap would have to be 150 g/KWh to force all gas plants to deploy largely unproven carbon capture and storage technology.”
“The move by the EIB is very welcome, but more needs to be done. The EIB should strengthen its standards and eventually phase out its support for all power supply based on fossil fuels,” said the environmental group WWF.
However, the Germans are contesting this move as Germany’s director on EIB’s board urged the bank not to halt funding of coal plants, according to observers at the EIB meeting.
Reuters reports that Germany gets 45 percent of its power generation from coal and lignite as it continues to shut down nuclear power plants in the wake of the 2011 Fukushima nuclear incident.
In fact, as Germany weans itself off nuclear power, even Hamburg — dubbed “Europe’s Environmental Capital” in 2011 — is now building a coal-fired power plant to provide the city with much needed electricity.
“At least until 2030, or 2050, Germany will have to have some fossil-fuel energy,” said Jutta Blankau, Hamburg’s environment minister, in an interview. “Hamburg is one of the industrial centers of Germany. For now we can’t support that through renewable energy alone. We need coal and gas plants to complement power from renewables.”
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