G7 Nations Agree to Halt Funding for New International Coal Projects

ON 05/24/2021 AT 10:57 PM

The Group of Seven (G7) nations signed off on an agreement on May 21 that would halt the financing of international coal projects by the end of this year. As with many such initiatives, this one has little “teeth” in it, too many loopholes, and comes way too late to save the planet.

The G7 group, which includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, signed off on this latest pact at the end of a virtual gathering which was held May 20-21, 2021.

Among the multiple proclamations in this agreement is the following statement:

“We stress that international investments in unabated coal must stop now and commit to take concrete steps towards an absolute end to new direct government support for unabated international thermal coal power generation by the end of 2021, including through Official Development Assistance, export finance, investment, and financial and trade promotion support. We commit to reviewing our official trade, export, and development finance policies towards these objectives.”

The declaration was made, according to the agreement, in recognition “that coal power generation is the single biggest cause of global temperature increases.”

A recent examination of data for the sources of fossil fuel emissions backs this up. As noted in the graph below, despite that coal burning is on a slight decline in recent years, it remains the single biggest contributor to fossil fuel emissions on the planet.

The Glaring Omission of China in the Plan

As another part of the same graph pair illustrates, however, the above agreement begins with one big gaping hole which will undermine its effectiveness in doing much about global carbon emissions. That is because China, the largest fossil fuel emitter on the planet, with coal emissions being their biggest single contributor.

It is a dark reality too that in 2019 58% of the electrical power generated in the PRC was provided by coal-burning plants in the country.

More such plants are coming soon from China as well. According to plans released by the government, some 247 gigawatts of new coal-fired power plants are now either in the planning stages, in pre-construction development, or being assembled at the time. At least 47 gigawatts of that total was approved in 2020 alone.

The combined total power of those new coal plants is about six times that of what Germany’s existing coal-fired power plants produce today.

As was revealed in the People’s Republic of China (PRC) 14^th Five-Year Plan, approved by the National People’s Congress in March 2021, the country’s future plans show another 73.5 gigawatts of coal-fired plants already in the planning stages. That compares to only 13.9 gigawatts of new coal-fired power plants proposed anywhere else in the world.

China claims it is taking important actions to reduce its carbon emissions, but there are few details and little evidence of such cutbacks. Uniquely among major economies in the world, it will only say it expects its emissions will peak around 2030. That comes with it, however, even if China is accurate in its proclamation, the production of 12.9 billion to 14.7 billion tons of carbon dioxide annually through the end of the decade. Those numbers work out to a 15% increase of carbon emissions annually compared to levels the country dumped into the air in 2015.

What About In-Country Financing?

Even beyond the omission of China in this new agreement, even more damning is that it is clear the G7 nations are making zero commitments about public support for funding coal-powered plants within their countries.

What this new agreement is talking about is solely about international funding of plants.

“We commit to promoting the increased international flow of public and private capital…away from high-carbon power generation to support the clean energy transition in developing countries,” the statement declares.

“We further call on other major economies to adopt these commitments,” it goes on, with a clear dig at China’s continued outreach to developing countries looking to power their emerging economies with coal.

That dig aside, the current proclamation unfortunately makes it all too easy for the G7 to continue providing extensive direct and indirect funding of their own power plants.

In fairness to the agreement, direct funding for coal power plants will likely continue to decrease steadily over the next few years. Indirect funding, however, in the form of subsidies, tax breaks, and even “preferred use” agreements, under which coal plants may be given preference as power providers over alternate grid-independent options such as wind and solar, will likely continue for some considerable time to come.

Considering the impact of use of coal in the G7 nations, especially in the United States where just under 20% of its electrical power comes from coal, and Japan, with draws 38% of its power from coal, this represents a sizeable hole in the current G7 agreement stated objectives of limiting carbon emissions.

Beyond that, Japan has also come on strong as a fierce defender of the importance of coal as a source of electrical power both for its country as well as others. Unlike the rest of the G7, it has embraced construction of what it calls “cleaner” high efficiency coal plants at an accelerating rate through 2030 at least. So while it does pay lip service to the cause by saying it will be phasing out 90% of its older and more polluting coal-fired power plants, it has no intent to give them up.

Japan is also putting its overseas money where its mouth is, on this at least. Japan is currently the largest financier within the G7 group for total in-country and overseas coal power plant construction.

Japan is justifying this by saying its new state-of-the-art “cleaner” coal power, a branding similar to what the U.S. attempted to do with its “clean coal” subterfuge embraced by the Trump team, is in fact consistent with its 2015 Paris Climate Agreement pledges. The country then signed off on reducing greenhouse gas emissions from what they were in 2013 by 26% before the end of the current decade.

With Japan’s strong commitment to taking that concept to developing countries, even with the current G7 pledge it is likely Japan will move to shuttle as much financing money overseas, especially into Southeast Asia, for similar “cleaner” coal power.

To make it clear, there is no such thing as “clean” coal and the only way to avoid carbon emissions from coal-fired power plants is to stop making them. As evident above, neither Japan nor the U.S., as well as likely in the United Kingdom as well, well over half the investment money among the G7 nations (because of the U.S.’s disproportionate share of such investments) will include coal financing of one or or another in its mix.

In the End, the New G7 Agreement Will Have Little Impact

Whether it is because of playing legalistic with agreements like the current ones to allow continued large investments in coal plants to continue, or because China’s continued mass pumping of coal-based carbon emissions into the atmosphere will continue, these loopholes in what the G7 deal was purportedly all about do not matter much.

That is because carbon emissions are already at a high enough level that global heating will continue for decades to come. They will also become even worse as secondary effects, such as the already near-complete damage to rainforests like the Amazon which has turned that former carbon absorber into a net emitter, accelerated ice melting in Greenland and all areas of the cryosphere, the likely total elimination of sea ice in the Arctic, and Siberian wildfire outbursts, are already propelling the Climate Crisis into unstoppable uncharted territories.