France, with support from the United States, intends to propose a cessation of private financing for coal-based power plants — ahead of the upcoming U.N. climate conference, Reuters news report said.
This move, named the “New Coal Exclusion Policy,” aims to halt financial backing from private institutions and insurers for coal-powered facilities, escalating divisions expected at the COP28 summit in Dubai from Nov. 30 to Dec. 12.
France’s Minister of State for Development, Chrysoula Zacharopoulou, communicated this plan to the Indian government earlier in the month, underscoring the proposal’s contentious nature. Notably, India and China oppose any attempts to obstruct the construction of coal-fired power stations, crucial for their energy-intensive economies.
While the French minister’s office did not directly comment on the queries, discussions surrounding investments in coal have been ongoing at various multilateral forums for several years.
The proposed policy, aimed at drying up private funding for coal power, is a primary agenda for French President Emmanuel Macron at COP28. The strategy involves the Organisation for Economic Co-operation and Development (OECD) setting coal-exit standards for private finance entities, whose financing could be monitored by regulators, rating agencies, and non-governmental organizations, as outlined by Indian officials familiar with the plan.
The U.S., European Union, and Canada, among others, are aligned in seeking an accelerated phase-out of coal, which they identify as a significant threat to climate goals. Their concerns stem from continued international private financing supporting substantial additions to coal capacity in developing nations.
Roughly 490 gigawatts of new coal capacity, equivalent to one-fifth of the existing global capacity, are planned or under construction, primarily in India and China, according to officials.
Rick Duke, Deputy U.S. Special Envoy on Climate Change, emphasized the urgency for a rapid transition away from coal, given the significant expansion in coal-fired plants globally.
India, where 73 percent of electricity is coal-generated despite increased non-fossil capacity, plans to resist setting a deadline for fossil fuel phase-out at COP28. Instead, it aims to redirect the focus toward reducing emissions from alternative sources and may urge developed nations to aim for carbon negativity by 2050, highlighting coal’s continued significance in their energy landscape for the foreseeable future.
IEA report on coal use
The International Energy Agency (IEA) has earlier said coal consumption rose 3.3 percent to reach a record 8.3 billion tons in 2022. However, projections for 2023 and 2024 suggest marginal declines in coal-fired power generation, counterbalanced by increased industrial utilization of coal, though with significant discrepancies across different regions.
Regional Consumption Dynamics:
Asia’s Dominance: China, India, and Southeast Asian nations are poised to contribute to three-quarters of the global coal consumption in 2023. Their escalating consumption continues to shape global coal demand, with China and India alone accounting for nearly 70 percent of the global share in 2023.
Europe’s Transition: The European Union witnessed modest coal demand growth in 2022, with temporary spikes in coal-fired power generation offset by reduced industrial usage. A sharp decline in European coal use is forecasted for 2023 due to renewable energy expansion and partial recoveries in nuclear and hydropower sectors.
U.S. Decline: In the United States, the decline in coal consumption is exacerbated by lower natural gas prices, steering the nation further away from coal-based energy sources.
Market Stability Amid Fluctuations:
The global coal demand witnessed a 1.5 percent growth in the first half of 2023, primarily driven by a 1 percent increase in power generation and a 2 percent rise in non-power industrial uses.
Shifts in Consumption Patterns:
The demand for coal in the first half of 2023 plummeted unexpectedly in the United States and the European Union by 24 percent and 16 percent, respectively. Conversely, China and India experienced a robust growth rate of over 5 percent, compensating for the declines observed in other regions.
Global Perspective:
Asia’s dominance in coal consumption is an ongoing trend, with China and India collectively consuming twice the amount of coal as the rest of the world combined in 2021. This year, their joint share is projected to reach nearly 70 percent. In contrast, the United States and the European Union, which accounted for 40 percent of global consumption three decades ago, now represent less than 10 percent.