UK pledges to stop funding overseas coal power stations

The UK is to end state funding for new coal-fired power stations in developing countries except in ‘rare’ cases, the government has announced.

Government money donated to poorer countries through multilateral development banks (MDBs) can currently be invested in coal plants, but the UK is now to join the US in ending this practice in most circumstances.

The Department of Energy and Climate Change (DECC) was unable to provide details of how much UK money is spent in this way, but research from the US Natural Resources Defence Council suggested the figure was over $500m (£310m) since 2007.

Speaking at this week’s UN Climate Change Conference in Warsaw, energy secretary Ed Davey said the practice conflicted with the UK’s goal of reducing carbon dioxide emissions.

‘It is completely illogical for countries like the UK and the US to be decarbonising our own energy sectors while paying for coal-fired power plants to be built in other countries,’ he said.

‘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.

‘Like the US, the UK recognises that there will be exceptions. We need to take account of new technologies such as Carbon Capture Storage and the very poorest countries where there are no alternatives. But many developing countries will soon find solar and similar energy technologies will become cheaper not just cleaner.’

A statement from DECC said the government would ‘only consider MDB proposals for financing coal-fired power plants in the world’s poorest countries where no other economically feasible alternative exists’.

Such proposals would have to show a compelling poverty reduction case and be part of a low-carbon development pathway including an option to install carbon capture and storage (CCS) technology, or include full CCS deployment from the start.

The US and the World Bank made similar announcements over the summer. According to the US Natural Resources Defence Council, Japan has been the biggest funder of overseas coal plants since 2007 ($19.7bn) followed by the US ($8.9bn) and Germany ($6.0bn).