Eradicating coal in favour of renewable energy is gaining support around the world, but G20 governments are still directing 52% more development and export financing to the dirtiest fossil fuel than they do to clean alternatives, the Natural Resources Defence Council (NRDC) reports.
NRDC examined G20 countries’ public financing of developing countries’ energy projects. It found that while financing for renewable energy projects has grown, it is still overshadowed by the support those countries are pouring into coal infrastructure. (Disclosure: The Energy Mix curator Mitchell Beer works is a consultant with NRDC’s Canada Project, but was not involved with the organization’s coal finance study.)
Collectively, the G20 group of countries financed US$38 billion in coal projects abroad between 2013 and 2016, NRDC found, compared to $25 billion in renewables projects.
More troubling still, the gap is widening, with coal financing expected to be twice the total for renewables for some time to come. “There’s a pipeline for over $28 billion in future coal projects, compared to only $14 billion for future renewables projects, that G20 nations are financing beyond their borders,” the study finds.
The main vehicles of support are export credits and financing programs. Across the G20, those instruments directed roughly $25 billion to coal, out of a total energy portfolio of $28 billion. With the exception of the African Development Bank, the World Bank and other regional development banks studied directed between 70 and 100% of their lending to renewable energy projects, according to the NRDC study.
Nearly 90% of coal financing came from just five countries—at least two of which are making strenuous efforts to wind down their use of coal at home. During the study period, NRDC reports, “the five biggest G20 coal financers were China ($15 billion), Japan ($10 billion), Germany ($4 billion), Russia ($3 billion), and South Korea ($2 billion). These five countries supplied 89% of G20 coal financing.”
Germany led renewables financing, with $4 billion committed during the study period. It was followed by the United States ($3 billion), Japan ($3 billion), France ($1 billion), and China ($0.6 billion). Together, the five countries and multilateral development banks provided 96% of G20 renewables financing.
Only Canada, the UK, and United States were found to have no coal investments abroad
The biggest recipients of coal financing were Vietnam, Indonesia, and India, where G20 lenders are supporting the development of 24 gigawatts of high-polluting power generation.
“Given the falling costs of renewable energy and the dire health and environmental impacts associated with coal,” the NRDC authors wrote, “governments should not be using their funds to invest in more coal projects abroad. The Paris agreement called on nations to support a low-carbon future. G20 financial institutions could lead the clean energy transition, but not all of them have made that commitment.”
Disturbing as they are, the NRDC’s conclusions are actually less alarming than some reached earlier this year. Oil Change International, Friends of the Earth U.S., the U.S. Sierra Club, and the WWF European Policy Office calculated that G20 public finance institutions and multilateral development banks had poured US$71.8 billion per year into fossil projects between 2013 and 2015, four times the amount they devoted to renewable energy.