Coal news and updates

The Australian government is lobbying hard for the China-led Asian Infrastructure Investment Bank to include coal among its lending priorities, as the country seeks to defend its lucrative exports.

The AIIB, billed by some as Beijing’s answer to the World Bank, launched last year with a promise to be a “green bank” with an emphasis on renewable power. But with a draft energy strategy due to be published this month, it has not ruled out funding coal projects.

 

With 57 members including Germany, France and the UK joining the lender despite initial warnings from the US not to do so, the AIIB marks China’s most ambitious foray into financial diplomacy yet. Its capital is about half that of the US-led World Bank.

 

Indonesian officials have asked the AIIB to finance coal-fired power plants in the archipelago, and other Asian nations are said to be interested. But Australia, with huge natural gas and coal exports, is primarily concerned with preserving overseas markets.

 

“The [Australian] government wants the AIIB energy strategy to acknowledge that fossil fuels will play a significant role in energy generation in the region for decades to come,” said Kate Williams, a Treasury spokeswoman, adding that their inclusion would ensure that “Australia is not disadvantaged competitively”.

 

The bank’s draft energy plan, to be finalised early next year, will determine which projects it supports in Asia. The region needs $8.74tn of investment in energy between 2016 and 2025, according to AIIB forecasts.

 

An issue paper published by the bank in October prioritises the upgrading of existing energy projects to raise efficiency and proposes investing in renewable energy, including less-intrusive types of hydropower dam, and advises against any nuclear investment. But it does not exclude the possibility of new coal projects.

 

The paper noted that fossil fuel production has had “severe negative impacts” on the environment, especially in Asia’s densely populated cities. “Coal and oil-fired power plants would exceptionally be considered if cleaner technologies are not available for well-founded energy security or affordability reasons,” it said.

 

That has worried Australia’s powerful coal lobbies. The Minerals Council of Australia, the country’s biggest industry lobby, accuses the paper of ignoring clean coal technologies, while the Business Council of Australia has written to the AIIB that Australia’s higher-quality coal can help curb emissions growth in Asia.

 

“The goal of economic development — and the legitimate aspirations of nearly 500m people in Asia to energy access — must not be subordinated to climate policy objectives,” the MCA said.

 

Under pressure from members, the World Bank has limited lending to coal-related projects because of concerns about pollution and climate change. The European Bank for Reconstruction and Development finances coal projects under “rare and exceptional circumstances” such as better heat-and-power plants in Mongolia.

 

Meanwhile the US and other countries are involved in financing “clean coal” projects in China in an effort to reduce emissions from the country’s most important fuel source.

 

The Asian Development Bank has funded coal projects, especially in countries with power shortages. Likewise, China’s national policy banks finance and build coal-fired and nuclear plants in many countries, as do other Chinese overseas funds.

 

When asked this week about Canberra’s lobbying of the AIIB, Julie Bishop, minister for foreign affairs, said Australia had to be realistic and pragmatic as there was a place for coal in the world’s energy requirements for decades to come.

 

“It will be essential for some countries to be able to reach an acceptable level of development to have supplies of cheap reliable energy and given the number of people around the world who still do not have access to electricity this is a fundamental human right,” she said.

Source: FT.COm