To tackle global warming, the world’s richest nations are willing to cut government support for new coal-burning power plants in developing countries which will drastically cut the exploitation of coal which has long been the major source of electricity production. The U.S. President Barack Obama has already set an agenda to reduce carbon emission and bolster eco-friendly renewable energy.
Earlier in June the year, President Barack Obama pledged that his government would no longer finance overseas coal plants through the U.S. Export-Import Bank. Falling on the line were the World Bank and the European Investment Bank which have pledged to support only renewable energy based projects and have racked in more than $10 billion for the purpose in the past five years.
Diminishing Support for Coal Based Power Projects
When there would not be governmental financial support to carry out coal based power projects, the demand for coal will diminish to record levels for there is not much private capital available. Additionally, only a few private organizations would risk their capital investing in coal based power plants as they may be shut down later on for eco-friendly options.
Large demand for coal has always been from the developing nations as there are various strict environmental regulations in the U.S. and other developed countries and coal does not fit anywhere in the scene. Now, with the latest policy decisions on the part of the U.S. government, the World Bank, and the European Investment Bank will further diminish the demand for coal.
Financial Support to Developing Countries Fueled Demand for Coal
Coal based power plants in developing countries like India, South Africa and others have received attractive funds from government-backed lenders like Ex-Im Bank, the World Bank, the European Investment Bank, etc. The World Bank allocated $6.26 billion for coal-related projects over the past five years; the Ex-Im bank gave more than $1.4 billion to two coal projects, one in South Africa and another in India.
Currently, more than 40% of the electricity in the world is generated by coal based power plants; the latest decision will definitely have great implications, particularly when the demand for coal has soared i.e. it increased by a record 50% in the last decade. It will also have an impact on the U.S. as it is the world’s second-largest producer of coal.
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