Asian ECAs sustain coal’s threat to world climate

(New Statesman, London, 25 January 2021) The sun may be setting on coal-fired power in Europe and North America, but its persistence in Asia threatens global climate targets. Crucial to that darkening outlook is the growing difficulty that coal-fired power plants face in raising finance. Private sector banks, under pressure from investors and activists, have been gradually pulling back from lending to coal projects (although campaigners complain that their fossil fuel exclusion policies are often not tight enough). Instead, developers had looked to concessional finance from the Chinese, Japanese and South Korean governments, whose export credit agencies were happy to lend at attractive rates to projects that used turbines and other equipment supplied by their industrial giants. “[Approximately] 90 per cent of all coal-fired power plants built in Asia in the last five years were underpinned by export credit agency finance,” says Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis (IEEFA). All three of those countries are shutting their chequebooks, under pressure to act on climate change.  But the latest IEA data comes with a sting. The Paris-based agency, part of the OECD, forecasts a rebound in coal demand of 2.6% in 2021 as the global economy recovers. Global Energy Monitor data also shows a small increase in the coal power pipeline last year, as Chinese regional apparatchiks, chasing economic growth targets, waved through new project applications.