Global Warming Research & Analyses
Assessment of U.S. restrictions on public financing for new coal-fired power plants overseas and proposed regulation
Assessment of U.S. restrictions on public financing for new coal-fired power plants overseas and proposed regulation
In June 2013, U.S. Obama administration announced conditions on public financing for new coal plants overseas among its "President's Climate Action Plan". This announcement virtually declares halts to financial support to new coal plants except for the most efficient coal technology available in the least developed countries with no other economically feasible alternatives, or facilities deploying CCS technology which satisfies CO2 emission limit of less than 500gCO2/kWh. In addition to that, The U.S. Department of the Treasury announced in October 2013 the guidance on Multilateral Development Banks calling for such financial supports that consist with its own.
Under these condition, we have estimated GHG emissions and average reduction costs when; i)only new coal plants with CCS are allowed, and ii)new highly-efficient coal plants are also allowed, considering the case in which loophole appears.
The analysis suggests that when assuming stringent condition of emission reductions by all regions including developing countries, there are low incentives to construct low- and middle- efficiency coal plants. In this case, a certain amount of emission reductions will be achieved even without regulation on new coal plants.
In reality, however, it is challenging to set stringent reduction targets for all countries. Under such loose restriction on emissions, low- and middle-efficiency coal plants will continue to be used with using finance by developing countries', although stringent financing restriction by U.S. government exists. This large loophole might cause increase in global CO2 emissions.
Our results show that allowing public financing for highly-efficient coal plants will lead to effective reductions and low reduction costs, instead of applying strict regulation which only allows it for coal plants with CCS.
