Rhein on Energy and Climate

Coal-fired power plants are the worst emitters of greenhouse gases. This goes for US, China, India, Australia, Poland and many other countries.

It is therefore urgent to curb their emissions. This can be done by:

  • fixing strict C02 emission standards;
  • inviting banks to make loans for power plants subject to strict emission standards.

The USA is following the first approach.

In future its power plants will have to respect a cap of 500g CO2/kWh. That is what highly efficient gas-fired plants emit. Coal-fired power plants will have to be equipped with carbon capture and storage equipment (CCS), which is expensive and risks making them uncompetitive.

The European Investment Bank is following the second approach.

It has most recently decided to tie loans for power plants to the respect of a strict emission standard of 550g CO2/kWh, more or less equivalent to the new US standards. That will probably end financing new coal-fired power plants in the EU.

The World Bank has reduced its lending for coal-fired power plants to a minimum. But other development banks, in particular Chinese and Arab ones, continue financing without caring about emission standards.

To tackle the issue globally, all global and regional development banks should apply strict emission standards for lending to the power sector and concentrate their lending on gas, wind, solar and biomass power plants.

The World Bank should rapidly take the initiative for such a deal to which major private lenders should be associated in a second stage.

By the end of 2015, in parallel with the decisive International Climate Conference in Paris, such a deal should be in place. It would be one of the most effective tools in the fight against climate change and make, politically often difficult regulations by governments largely superfluous.

Eberhard Rhein, Brussels, 24/9/2013

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