Barbara Hendricks: KfW funding for coal-fired power plants to be curbed

KfW finances coal-fired power plants. Will the bank drop the climate killers?

In the run-up to the UN climate summit in New York, German Environment Minister Barbara Hendricks announced strict curbs on the financing of coal-fired power plants by Kreditanstalt für Wiederaufbau (KfW). The details are still to be worked out, however – especially with regard to exceptions.

KfW is best known in Germany for funding renewable energy and thermal insulation, yet it also finances the construction of coal power plants, coal mines and associated infrastructure such as port facilities for coal export. In the period from 2006 to 2013, nearly €3.3 billion were approved for coal-related projects, and of that, €2.6 billion went abroad. For months, the development, environment and economic affairs ministries negotiated a possible change in funding practices. Environmental and development organizations have called for a complete stop to coal project financing and the redeployment of funds thus freed up to renewable energies. There are ample reasons for this.

It appears that an agreement in principle has now been reached within the German government: The financing of coal power plants within the context of development cooperation will largely cease – with exceptions that need to be specified, for example in cases in which alternatives are difficult to realize.

Restriction does not apply to IPEX

The Environment Minister’s announcement will not initially apply to IPEX, a pure private-sector subdivision of KfW that is not bound to the goals of development policy. IPEX is responsible for more than half of KfW’s financial commitments for coal projects. KfW’s financing of climate-damaging coal power plants on behalf of the German government has thus been contained, but not abolished. The contradiction to Germany’s climate policy objectives therefore remains. This also holds true for Hermes guarantees, with which the government continues to insure the export of coal power plants against default – and thus ultimately subsidizes them.

Jan Kowalzig / Oxfam