OECD Coal Financing
Agreement
Kate DeAngelis
International Policy Analyst
Friends of the Earth U.S.
kdeangelis@foe.org

The Future of Fossil Fuels• A recent Oxford study found that no new fossil fuel electricity
infrastructure can be built after 2017 to have a 50% chance ofkeeping warming to 2 degrees Celsius.
• There are already plans for coal plants that will result in 6 times
more carbon pollution than is possible to keep warming to 1.5
degrees Celsius.
Source: WWF, 2016

• Even though thevast majority of existing
reserves can never beburned, governments
continue to fundexploration.

Export Credit Agencies• Most Export Credit Agencies do not havedevelopment mandates• Their primary purpose is to help domestic
companies to export.

• OECD provides a negotiating forum that
establishes guidelines for ECAs of member
countries, including on environmental and socialissues.

ECA Coal Financing• In the past decade, ECAs have become the largest
source of public financing for extractive energy andinfrastructure projects.
•OECD ECA support for coal has been increasing.

• France, Germany, Japan, South Korea, and the USare responsible for 92% of coal power plant ECA
financing from 2009 to 2014.
• OECD member ECA financing contribute to nearly
one-quarter of new coal power outside of China.

ECA Oil and Gas Financing• No restrictions currently exist on oil and gas financing eventhough it is quite high and includes support for exploration.
• According to the OECD Export Credit Group Secretariat, OECD
ECA finance for oil and gas extraction and power plant was
roughly five times that of coal between 2003 and 2013.
• OECD estimates that OECD member country public supportfor fossil fuels over all is at least $8 billion annually – even thisfigure they admit is probably too low.

• Between 2013 and 2014, total fossil fuel finance from NEXIand JBIC averaged about $15.5 billion per year.

National Coal Restrictions
United States: In 2014, the U.S. Export-Import
Bank began to restrict its financing for coalplants abroad as part of the implementation ofPresident Obama’s Climate Action Plan.

France: In 2016, Coface halted subsidies forcoal power plants in developing countries
unless plants equipped with Carbon
Capture and Storage technology.

Public Coal Finance by Year

Source: OCI, Under the Rug, 2015

OECD Export Credit Agencies provided nearly half of thetotal international finance for coalPublic Coal Finance by Country

Source: OCI, Under the Rug, 2015

Japan provided the largest amount with over $20 billion
from 2007 to 2014.

The Agreement• On November 17, 2015, the OECD Export Credit
Group reached an agreement to restrict export credit
subsidies for coal plants.
• The agreement was a compromise that will notcompletely eliminate financing for coal plants.

• The agreement represents the first time that a large
number of ECAs have publicly acknowledged that
financing for greenhouse gas emitting projects abroad
is a problem.

OECD Agreement Alone Will Not
End Coal Financing• The OECD agreement still allows public export
credits for 40.3 GW of new coal-fired power capacity
for which the technology is known.
• The OECD agreement is, therefore, not compatible
with the Paris agreement, which aims to keep warming
to 1.5 degrees C above pre-industrial levels.
• The final coal capacity that could receive OECD
export support will likely be much higher given that
more than half of the current coal plant pipeline is of
unknown technology, and other loopholes.

Arrangement v. Non-Arrangement• The Arrangement on Officially Supported ExportCredits provides a framework for OECD member
countries’ use of export credits.
• The OECD Export Credit Group Secretariat has
documented that between 2003 and 2014 “almosthalf” of OECD member ECA financing for coal felloutside of the scope of the Arrangement.
• The agreement only covers Arrangement
financing, meaning that about half of OECD ECA coalfinancing is not covered by the agreement.

ECAs Can Still Finance:• Exploration for and mining of coal, as well as
coal-related infrastructure financing, including
projects to transport or export coal.
• All other fossil fuels, which account for roughly
five times more OECD ECA financing than coal,according to the OECD Export Credit Group
Secretariat.
• Modernization and supplies for existing coalplants.

Public Coal Finance by Project Type

Source: OCI,
Under theRug, 2015

Coal Plant Efficiency• According to research by Ecofys, even high-efficient low-emission(HELE) power plants are incompatible with 2 degrees Celsius.
• Even if every planned coal plant was a HELE plant, warming would
exceed 2 degrees Celsius.
• Even the most efficient coal plants pollute almost as much as lowefficiency plants .

Source: WWF, 2016

Slow Timeframe• Even though agreed to in 2015, it does not go
into effect until 2017, which could cause a rush ofapplications for coal plant financing in 2016.
• The agreement will be renewed in 2019 and thenext amendment in 2021. This is too slow of atimeline to achieve the needed improvements to theagreement, including all fossil fuel plants andinfrastructure.

Examples of Projects that Would Still Be
Allowed under the Agreement• Bangladesh: Orion
power plants near Dhaka
and the Sundarbans• Indonesia: Batang
power plant in central Java
• Australia: export port
inside the Great Barrier
Reef World Heritage Area

Exemption for the Poorest Countries• These restrictions do not apply to projects in thepoorest countries where there are no viable options.
• Coal projects would do little to support energy
access or poverty reduction in the least developed
countries, and will make conditions worse throughdeadly pollution.

Coal and Energy Access• 1.1 billion people lack electricity• Off-grid systems are often cheaper and morereliable• Export credits have rarely supported
electrification efforts in the poorest countries.
No coal projects financed in the past eight
years were in low-income countries.

Coal Being Built Where AccessAlready Exists

Source: ODI, https://www.odi.org/coal-and-poverty-faq-energy-accessCoal ≠ Economic Growth

Source: ODI, Zero Poverty, Zero Emissions, 2015.

Recommendations for the OECD
• Require public disclosure of all data on publicfinance for fossil fuels, including both arrangement
and non-arrangement financing, as well as
investments made through financial intermediaries.
• Require an end to all financing for fossil fuelprojects, including exploration and extraction
projects.