Germany Cutting Aid for Foreign Coal Power Plants

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Germany looks set to follow in the U.K.'s footsteps by severely limiting investment in foreign coal-fired power plants.

The Environment Ministry announced it plans to limit the amount of investment that the state-owned development bank, KfW, can invest into coal-fired projects outside of the country. Over the period of 2006 to 2013, KfW loaned 2.8 billion euros ($3.6 billion) to coal projects in a number of countries, including India, Greece and South Africa. The move is meant to bring Germany in line with other European nations and institutions that have declared financial cut-offs for coal-based power projects, in an effort to support global climate change goals.

Speaking to the news media, a ministry spokesperson said: "Government departments have agreed that the financing of coal projects by the KfW banking group should be limited in future. In [the] future, financing for the construction and rehabilitation of coal plants will be completely ruled out and financing for the modernization of operating coal plants will be limited and only available under clearly defined criteria."

Last December, the European Bank for Reconstruction and Development (EBRD) adopted a five-year strategy, part of which was a ban on coal power investments to support the move to lower-carbon fuel sources. It stated that in "alignment with other international financial institutions, the EBRD will not finance any coal-fired power generation projects except in rare and exceptional circumstances in which there is no feasible alternative energy source."

In July 2013, the World Bank outlined a new 10-year strategy in its "Energy Sector Directions Paper," that would limit financing of coal-fired power plants to "rare circumstances".

In November 2013, the U.K. government announced it was joining U.S. efforts to cut funding for foreign coal-fired projects. U.K. Energy and Climate Change Secretary Edward Davey announced plans to end support for public financing of new coal-fired power plants overseas, except in rare circumstances, in which the poorest countries have no feasible alternative. The U.K. and U.S have set out to work together to secure support from other countries and multilateral development banks (MDBs) to adopt similar policies. For additional information, see November 25, 2013, article--U.K. to Stop Funding Foreign Coal-fired Plants.

"It is completely illogical for countries like the U.K. and the U.S. to be decarbonizing our own energy sectors while paying for coal-fired power plants to be built in other countries," Davey explained at the time. "It undermines global efforts to prevent dangerous climate change and stores up a future financial time bomb for those countries who would have to undo their reliance on coal-fired generation in the decades ahead, as we are having to do today."

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