Coal power plants in developing countries are in the line of fire. On Thursday, the US Export-Import Bank, or the EXIM Bank, decided not to fund a 1,200 MW coal power plant in Vietnam (see box). Two days ago, the World Bank too voted in favour of not funding new coal power plants in developing countries. This put an end to the long-debated issue of where the World Bank should draw a line between its overarching development goal of ensuring energy access to the poor and its more recent position on addressing climate change concerns.
It may be no coincidence that these decisions come just weeks after US President Barack Obama in his speech on climate change indicated a shift in US policy on coal, both domestically and internationally. After calling on federal agencies to place a cap on both existing and new coal plants in the US, the president made his intentions clear. “I’m calling for an end of public financing for new coal plants overseas—unless they deploy carbon-capture technologies, or there’s no other viable way for the poorest countries to generate electricity. And I urge other countries to join this effort,” Obama had said.
The World Bank’s policy change as stated in its energy group’s guiding document, titled “Towards a sustainable energy future for all”, reads somewhat similar. “The WBG (World Bank Group) is committed to maximizing synergies between economic development and climate change mitigation. The WBG will cease providing financial support for green field coal power generation projects, except in rare circumstances. Considerations such as meeting basic energy needs in countries with no feasible alternatives to coal and a lack of financing for coal power would define such rare cases.”
