Germany and France lead the EU in financing international coal projects through export credits

Photo: GuenterHH. This image is licensed under Creative Commons License.

Between 2003 and 2013, the 34 member countries of the OECD provided export credits for coal-fired power plants to the tune of $12.8 billion. One third of that amount came from EU countries: France ($1.8 billion) and Germany ($1.1 billion) are the leaders within the EU. For the OECD as a whole, South Korea ($4.1 billion) and Japan ($3.3 billion) topped the list according to a recently leaked internal OECD document.

The organization has discussed possible restrictions on such public support for coal projects last week, but failed to come to an agreement. A number of countries such as Poland, the Czech Republic, Australia, Japan, South Korea and Turkey are blocking any progress in this regard. A few countries – including the UK, the Netherlands and France – support the U.S. call for a reduction or ban.

It would be vital for the EU in particular to send the right signal in the run-up to the Paris climate conference: while a ban on export credits for coal technologies by all OECD member countries would definitely be a decisive step in the right direction, it remains a distant goal with an uncertain outcome.

In Germany, the political debate about the future of coal finance is in full swing. Shortly before Christmas, the federal government submitted a report on international coal finance to the Economic Committee of the Bundestag. Specifically, it states that:

• KfW financing will no longer be available for the construction of new coal-fired power plants or the upgrading of decommissioned coal plants. The modernization of existing plants will be subject to stricter terms than before.
• Generous support remains in place in the form of export finance through IPEX, the private-sector arm of KfW, whose mission is to promote the exports of German and European companies abroad.
• With regard to guarantees by the state-owned Euler Hermes GmbH, with which domestic industry can insure itself against defaults abroad, the same criteria as for KfW export finance shall apply in future – but only under the condition that they are then valid for all OECD countries.

The German government is hoping to achieve this with a resolution of the OECD partner countries, but after the debates of the past week, the prospects are not particularly good. With its less than ambitious national targets, the German government is not exactly sending positive signals – a leadership role would be rather different.

Lili Fuhr, Heinrich Böll Foundation