The world’s richest nations, moving to combat global warming, are cutting government support for new coal-burning power plants in developing countries, dealing a blow to the world’s dominant source of electricity.
First it was President Barack Obama pledging in June that the government would no longer finance overseas coal plants via the U.S. Export-Import Bank.
Next it was the World Bank, then the European Investment Bank, dropping support for coal projects. In the past five years, those banks have pumped $10 billion into such initiatives.
“Drawing back means there is less capital for these projects,” said Richard Caperton, managing director for energy at the Center for American Progress in Washington. “I don’t expect private capital to move in and fill the void, either, because there is a real risk that these plants will be turned off early.”
Demand for coal in developing nations has taken on increasing importance as the combination of stricter environmental regulations in the U.S., increasing deployment of subsidized renewable resources and a drop in the price of natural gas have pushed utilities to shut coal plants.
“We’ve never seen a cascading sentiment that coal is not acceptable like we’re seeing happen right now,” said Justin Guay, the head of the Sierra Club’s international climate program. “It’s a snowball running downhill.”
Environmental groups such as the Sierra Club are fighting coal plants and coal mines because coal releases the most carbon dioxide — the chief global warming gas — per unit of energy of any major fuel source.
Coal supporters say it’s a low-cost way for poor nations to provide light, refrigeration and air conditioning to their people. The move by lenders turns “our backs on millions without electricity and chooses not to help them achieve a better standard of living,” said Nancy Gravatt, a spokeswoman for the National Mining Association.