The U.S., Japan and other major economies have agreed to restrict public financing for coal-burning power plants built in other countries.
The agreement limits — but doesn’t entirely eliminate — export financing for coal plants. (Export financing includes a variety of loans and programs to help companies doing business abroad.)
And it comes at a symbolically important moment: Major climate change talks are scheduled to begin in Paris at the end of the month, and the pact signals at least some international commitment to reducing carbon emissions.
The 34 countries of the Organization for Economic Cooperation and Development signed on to the compromise, which was reached Tuesday.
Public financing for coal power plants abroad has been the subject of a long-standing dispute between the U.S. and Japan, the Associated Press reports:
“The Obama administration announced in 2013 that it would end U.S. financing for overseas coal power plants and has been pressuring others to join. Japan was among those opposed to the move, arguing that its high-efficiency power plant technology is the best option for developing countries that need affordable energy.
“Under the agreement, which takes effect in 2017, financing would still be allowed for the most advanced ‘ultra-supercritical’ plants and for some other plants in the very poorest countries.”
Counting those exceptions, the agreement would cut off funding for 85 percent of currently proposed coal plants, the Washington Post reports.
China, which has supported coal power plants abroad, is not a member of the OECD. But the Post reports that China has separately agreed to cut back on financial support for coal-burning power plants in developing countries:
“The Chinese government agreed to strictly control its support for overseas projects with high carbon emissions as part of its most recent climate agreement with the U.S. in September, which allowed Japan and the U.S. to forge a compromise proposal.”