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Abbott please stop encouraging other countries to subsidise coal

Since Prime Minister Tony Abbott came to power, Australia has developed an international reputation for being a spoiler on climate action. A report released at the climate change negotiations in Peru last December named Australia as the worst-performing industrial country in the world on the issue. Australia is now the number one emitter per capita among developed nations, and has slid to the bottom of global rankings for climate action.

Australia’s latest moves to block action on climate change are happening in an opaque forum at the OECD – the Export Credit Group. Export Credit Agencies provide government-backed guarantees, insurance and loans to private corporations from their home country, helping them to do business overseas. All developed and many emerging economies have them. The Export Credit Group is the forum for OECD countries to discuss common policies and approaches towards export credit financing.

The US, the UK and France, among others, are trying to get OECD countries to agree to ban future financing for coal plants overseas through their export credit agencies. They want to strike an agreement and put a policy in place before the important climate talks in Paris this December to demonstrate OECD commitment to action. Already several OECD countries, including the United States, the UK, Canada, Denmark and Finland, are taking steps to phase out coal domestically.

Australia doesn’t provide any support for coal plants overseas through its Export Credit Agency, EFIC, yet a leaked document has revealed that the Abbott government is opposing any policies that would restrict support for coal plants. Siding with Japan and South Korea, who provide billions of dollars in support for coal plants in Asia and other countries, Australia is trying to block any climate action at the OECD on this initiative.

The Abbott government is likely to be doing this for two reasons. First, to promote continued expansion of coal plants in Asia to firm up future markets for Australian coal. And most worryingly, because of an ideological opposition to any international measures aimed at curbing global warming.

Either way, the Abbott government is yet again illustrating its willingness to derail international processes in order to further its climate denying agenda.

Why is this important? Export credit agencies play a major role in supporting coal power plants globally and OECD export credit financing for coal has risen sharply in recent years. According to leaked OECD documents, between 2005 and 2012 OECD export credits financed nearly one-quarter of new coal power capacity outside of China, providing about US$11.5 billion in government subsidies to coal plants.

Continuing to provide public subsidies for coal plants overseas is simply indefensible. New coal plants will lock in decades of emissions, and frustrate international efforts to limit global warming to 2°C. They will also saddle millions of people with air pollution that will result in tens of thousands of premature deaths and millions of hospitalizations due to respiratory and other illnesses. Already, coal plants are responsible for nearly 800,000 premature deaths globally per year.

In the leaked document presented to the OECD, Australia tries to justify its opposition by claiming that coal is the cheapest way of providing access to electricity for the 1.2 billion people living without. Yet according to the International Energy Agency (IEA), because almost 85% of people without access to electricity are in rural areas, mini-grids or off-grid solutions will be the best way of bringing electricity to 70% of these people, and 90% of that electricity must be provided by renewables. Coal-fired electricity will simply not reach the vast majority of people currently living without power.

In addition, the fact that many public financial institutions with a development mandate, like the World Bank and the European Bank for Reconstruction and Development, have now severely restricted support for coal is proof that better solutions than coal are available for developing countries.

The continued self-interest and climate-blocking behaviour of the Abbott government is no doubt an embarrassment to most Australians. Australia is being left in the dust by other nations when it comes to responsibly addressing climate change.

It is not too late for the Abbott government to change its disappointing and counterproductive position, and to support the end of OECD export finance for coal overseas. The OECD will be doing the right thing if it stops subsidizing new, polluting coal plants and mines, and such a decision will pave the way for discussions with emerging economies like China to do the same. Above all, it should be made clear that there is simply no room for new coal if we are to limit global warming to 2 degrees celsius and avoid dangerous climate change.

source: http://www.businessspectator.com.au