Synopsis: Banks are cutting off funding for new coal-fuelled power plants in poorer Asian countries to hasten the shift toward cleaner energy sources.
Recent push for green financing:
Most key financiers, in Japan and South Korea as well as in China, have signaled disinterest towards overseas coal projects. For instance,
- China’s environment and commerce ministries advised some of the country’s biggest overseas lenders against investing in coal.
- China’s embassy in Bangladesh said that it would no longer consider projects with high pollution and high energy consumption.
- In Japan, JICA, has put no-coal pledges in their lending and bond-issuance policies. All of Japan’s biggest banks now have similar no-new-coal pledges.
- State-owned Korea’s Kepco, said that it would stop investing in new coal projects overseas and will either eliminate or convert to natural gas.
- UK asset manager, Legal & General Investment Management, sold its shares in ICBC and Kepco because it wasn’t satisfied with the companies’ approaches to coal.
Possible Implications of such move:
- First, the pullback could force poorer countries to curtail coal expansion plans and accelerate transitions to energy sources such as solar and wind.
- Second, it won’t affect most projects inside China and India. Both countries have big pools of domestic funding. China alone accounts for more than half of the roughly 480 gigawatts of coal-plant capacity in construction or planning stages worldwide, as per Global Energy Monitor.
- Third, China and India are building new coal-power capacity at a significantly slower pace than a few years ago. The countries’ investment in terms of gigawatt capacity was 80% less in 2020 than in 2015, according to International Energy Agency data.
- Fourth, the consumption of coal will still be around for a long time. The developing world has an enormous fleet of existing coal-burning facilities that will use coal for decades to come.
- Fifth, the price of solar and other renewable energies has plummeted, while the cost of financing coal projects has risen.
The world of 2021 is barely recognizable from five years ago when it comes to the degree and the intensity of finance campaigning and the results that are being got from it.