Another Global Financial Institution Moves Beyond Coal
It’s official: international financial institutions (IFIs) don’t see any place for coal in a 21st-clean energy economy. Earlier this year, two of the world’s largest IFIs, the World Bank and the European Investment Bank (EIB), announced their first historic restrictions on coal financing. Since then, the momentum has picked up speed. Like dominoes falling in line, governments from around the world -- from the U.S. to Norway -- have followed suit. The latest development is the U.K. government’s announcement that it too will end support for overseas coal plant construction. Not to be left out, the European Bank for Reconstruction and Development (EBRD) officially joined the movement today by moving beyond coal.
Even if you haven’t heard of the EBRD, you’re probably aware that coal plants don’t build themselves. They need support from banks like the EBRD. The bank’s announcement to move beyond coal is important not just because it’s the latest clear example of progress, but because the countries where the bank operates are hooked on dirty coal. The EBRD is the biggest public lender in in former Soviet Bloc countries that are heavily reliant on the dirty fossil fuel. Big coal companies are proposing larger and dirtier coal projects in many of those countries all too often -- and it will take clean energy leadership from an institution like the EBRD to stop them. The problem is EBRD hasn’t been providing it until now.
Between 2006 and 2011, the EBRD increased annual coal finance from 82 million USD to 359 million. That’s a 437 percent increase. It’s the exact opposite direction the region needs to head, particularly when EU coal consumption as a whole is declining.
Luckily, today’s announcement will dramatically curtail those numbers and send the EBRD, and the region in which it works, down a better path. That’s thanks to the tireless efforts of grassroots and civil society organizations who came together to push the institution to change its policy on coal. It’s also thanks to President Obama’s Climate Action Plan which instructs the U.S. Treasury to replicate coal restrictions at the international financial institutions where the U.S. is a stakeholder.
The EBRD is just the latest in a string of actions stemming from the U.S. climate action plan. First the U.S. Export Import Bank rejected a new 1,200-megawatt coal plant in Vietnam. Days later, the U.S. Trade and Development Agency shelved plans for a controversial new coal plant in the Ukraine. And just yesterday, the U.S. voted against a new coal plant proposed by the Asian Development Bank in Pakistan. Those decisions, along with the EBRD policy, have reinforced the fact that the U.S. is serious when it says it’s closed for overseas coal business.
But happy as we are today, a far more serious test looms. The controversial Kosovo coal project moving forward at the World Bank has been rumored to be seeking support from the EBRD as well. Approving this project would seriously undermine the progress and leadership shown by these policies. So while we applaud today’s announcement, all eyes are still on the EBRD, as well as President Obama. When it comes to coal restrictions, Kosovo is the world’s test.
--Justin Guay, Sierra Club's International Climate Program