EU to seek coal funding phase-out at OECD next week-sources

by Reuters
Tuesday, 10 November 2015 16:11 GMT

(fixes link)

* OECD has been seeking a compromise for more than year

* EU examines U.S-Japan-Canada deal closely

* Coal industry says coal is necessary for poor nations

By Barbara Lewis and Valerie Volcovici

BRUSSELS/WASHINGTON, Nov 10 (Reuters) - European Union negotiators will push hard at OECD-sponsored talks next week for a robust deal to phase out subsidies that allow rich nations to export coal plant technology, EU sources said.

The talks may be a final chance to end OECD export credits for coal, the most polluting of fossil fuels, before United Nations climate talks on a global deal to curb climate change, which begin on Nov. 30 in Paris.

The difficulty of agreeing that rich nations should stop allowing governments to fund coal is seen as a foretaste of the challenge of negotiating a new global pact on climate change.

Environment campaigners say last-minute proposals from major coal exporter Australia and South Korea, a major user of coal export credits, were so much weaker than previous compromises that they could scuttle the hosted by the Organisation for Economic Cooperation and Development (OECD), also in Paris.

"Behind window-dressing rhetoric, they clearly want to sabotage the OECD deal," said Sebastien Godinot, an economist at WWF. But European Commission officials, speaking on condition of anonymity, saw scope for agreement.

The OECD has been seeking a compromise on coal export credits for more than a year and says that, in general, the phase-out of fossil fuel subsidies is "alarmingly slow".

Wary of regional competition from China, Japan was at the vanguard of opposition to phasing out coal export credits that benefit companies such as Toshiba Corp.

But following talks in the United States, China promised to curb public funding of "highly polluting projects". A month ago, Japan agreed on a compromise with the United States and Canada, broadly in line with an EU stance on a phase-out.

Environment campaigners say even those positions are too weak.

However, compared with the Australian and South Korean position papers seen by Reuters, they would phase out export credits more quickly and would prevent them being used for less efficient and more polluting coal technology.

One Commission official said the EU executive was studying the proposal from the United States, Japan and Canada "with particular interest", adding it was an important new step towards an OECD accord.

Another EU official said the U.S.-Japan-Canada position could work if the EU aligned with it.

Japan and South Korea are the biggest users of coal export credits. Along with coal industry bodies, they argue coal has a role in providing energy security for poorer nations.

South Korea's position paper says developing nations lack "energy source options" and that non-OECD countries such as China and India, the biggest recipients of technology funded by export credits, should be included in efforts to cut greenhouse gases.

No-one from the OECD had any comment, while a South Korean energy ministry official only confirmed the position paper was the government's position.

(Additional reporting by Meeyoung Cho in Seoul; Editing by Tom Heneghan)

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