Environmental and Energy Study Institute

International Public Financing of Coal in a Carbon-Constrained World

On July 2, the Environmental and Energy Study Institute (EESI) held a briefing to examine the public financing of coal-fired power plants in the context of global efforts to address climate change. A recently released report by the Environmental Defense Fund found that multilateral development banks (MDBs) and export credit agencies (ECAs) of the industrialized world have financed the construction and expansion of 88 new coal plants since 1994 (when the United Nations Framework Convention on Climate Change entered into force). Cumulatively, these plants will emit approximately 791 million tons of carbon dioxide per year and cause an estimated 6,000 to 10,700 deaths per year from cardiopulmonary diseases and cancer. This briefing addressed the greenhouse gas and public health impacts of financing coal plants in developing countries as well as current efforts to increase international support for energy efficiency and renewable energy projects that will help solve the urgent problem of climate change.

Speakers for this event included:

• Bruce Rich, Senior Counsel for International Finance and Development, Environmental Defense Fund; author, Foreclosing the Future: Coal, Climate and International Public Finance
  Presentation (pdf format)
• John Balbus, former Chief Health Scientist, Environmental Defense Fund (EDF); adjunct Professor, George Washington University School of Public Health
  Presentation (pdf format)
• Warren Evans, Director of Environment, World Bank
  Presentation (pdf format)
• Lily Donge, Senior Sustainability Analyst and Manager, Environment and Climate Change, Calvert Investments
  Presentation (pdf format)

Streaming video of the briefing

Highlights from Speaker Presentations

• Coal is the most carbon-intensive of all fuels and coal-fired power plants have the second-longest generating life of all energy sources (after hydroelectric facilities).
• EDF's analysis found that MDBs' level of financing for fossil fuels is much higher than that for renewables and it is increasing; there was over $100 billion leveraged in financing for coal plants by public international finance versus $6.4 billion provided by the United Nations' Global Environment Facility since 1994.
• Recommendations from the EDF report include:
  - Deploy scarce public international finance in support of renewable energy and energy efficiency
  - Agree on greatly increased support for climate mitigation funding by industrialized nations
  - Calculate coal's true cost (including the social and economic costs of carbon emissions)
  - Create the first international database of greenhouse gas (GHG)-intensive investments and their emissions by public finance institutions
  - Negotiate an international agreement among OECD member nations on a common climate/GHG policy for their Export Credit Agencies (ECAs).
• There are health effects associated with coal-fired power plants as well: It is estimated that at least 6,000-10,700 annual deaths can be attributed to the 88 coal plants funded by MDBs, according to a study conducted by EDF.
• With 1.6 billion people lacking access to modern energy, we need to help countries grow economically and reduce greenhouse gas emissions at the same time.
• The World Bank's primary purpose is to induce economic growth in developing countries, but they realize that growth needs to be sustainable. They see the challenge in balancing the twin objectives of greater access to energy and sustainability.
• Sustainable and Responsible Investment (SRI) describes investment that takes into account the social, economic and environmental costs associated with each financial project.
• Most of the cost associated with solving the climate crisis is expected to be financed by the private sector.