After 2 years of debate, the OECD has recently announced that new rules on the official support for coal-fired power plants, including restrictions on official export credits for the least efficient coal-fired power plants, has been agreed.
The new agreement encourages both exporters and buyers of coal-fired power plants to move away from low-efficiency towards hjosir-efficiency technologies.
The agreement removes support for large super and sub-critical coal-fired power plants, while allowing support for smaller sub-critical plants in poorer, developing countries. It also allows support for up to medium-size super-critical plants in countries facing energy poverty challenges.
Restrictions on support will not apply to any plants equipped with CCS, as provided under the existing climate sector understanding.
The agreement contains a mandatory, built-in review process that will allow further revisions of the rules based on reports issued on climate science and on advancement in electricity generation technologies, as well as the development of domestic policy frameworks in both exporting and importing countries.
“These new rules will substantially limit official export credit support for new coal-fired power plants, and mark a major contribution to international efforts to combat climate change,” said David Drysdale, head of the export credit division in the OECD’s trade and agriculture directorate1. Over two-thirds of the coal-fired power projects receiving official export credit support from Participants between 2003 and 2013 would not have been eligible for such support under the new rules.
The new rules distinguish between:
Large (>500MW), Medium (≥300 to 500MW), and Small (<300MW) plants
Technology types (ultra-super critical; super-critical; and sub-critical), and
Levels of development of the project country
The new rules will take effect from 1 January 2017, and are subject to a mandatory review starting in 2019, with the goal of strengthening them.
The Participants to the Arrangement on Officially Supported Export Credits are: Australia, Canada, the European Union, Korea, Japan, New Zealand, Norway, the United States and Switzerland.