France ends state aid for coal technology exporters

Country to scrap subsidies for power plants sold to developing countries as it prepares to host UN climate change summit

Coal power generation accounts for 20% of global emissions (Photo: Lundrim Aliu / World Bank)

Coal power generation accounts for 20% of global emissions (Photo: Lundrim Aliu / World Bank)

By Jean-Baptiste Bonaventure

The French government is to end state subsidies for unabated coal power plants as the country buffs its climate image before hosting a UN-backed summit in Paris in December.

President Francois Hollande has delivered on a promise made nine months ago, using the announcement to gee up international negotiations as the critical summit nears.

The delay was due to the impact on Alstom, a French industrial group that makes power turbines and railways, and main beneficiary of the aid.

“We will immediately end export credits for all new coal power stations that are not equipped with CO2 capture and storage mechanisms,” prime minister Manuel Valls said on Thursday.

Report: Japan, Germany, Korea fuelling growth of coal power

Export credits are a mechanism for governments to encourage domestic companies to invest abroad, effectively offering free insurance against default.

France’s COFACE agency has guaranteed more than US$2.5 billion of coal projects over the period 2007-14.

In ending that support, the French government acknowledged it ran counter to global efforts to tackle climate change, which will involve phasing out fossil fuels.

The country has invested significant political capital in making the Paris summit, or COP21, a success.

“We must be exemplary in every way,” Hollande said from the Elysee palace in Paris, where he spoke alongside business leaders and senior politicians to launch France’s pre-summit programme, the FT reported.

Paris will host 40,000 delegates at a two-week December summit where almost 200 nations are expected to sign a global climate pact.

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NGOs welcomed the announcement, but worried about the carbon capture and storage proviso. The technology, to neutralise the greenhouse gas emissions from coal power generation, is only in place in a few places worldwide.

“Manuel Valls gave no indication of what he means by carbon capture and storage technology,” said Lucie Pinson of Friends of the Earth in comments reported by EurActiv. “He also failed to mention which countries may be excluded.”

The world’s wealthiest economies continue to pump billions of dollars of public finance into coal assets abroad in contradiction to their drive to lower national carbon emissions.

The OECD gave almost half of the $73 billion approved between 2007-14 with Japan, Germany and Korea the worst offenders, according to a report by Oil Change International.

The European Union will determine its position at a 16 September meeting, a day before OECD holds a consultation on export credit agencies’ coal subsidies.

 

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