Germany to Cut Support for Overseas Coal Plants

Germany plans to limit the financial support that the KfW state development bank can give to coal projects abroad, the environment ministry said on Thursday, falling into line with wider international efforts to limit global warming.

Critics of German energy policy argue that while Europe's biggest economy has embarked on a rapid expansion in renewable energy at home, it continues to support coal - widely considered a main contributor to global warming - both domestically and abroad.

Germany's Environment Minister Barbara Hendricks will outline the tighter restrictions at next week's United Nations climate change summit in New York, a spokesman said.

The move follows similar steps by other development banks, such as the World Bank and European Bank for Reconstruction and Development (EBRD), and the United States, though other countries, including Japan, are still going ahead with funding.

"Government departments have agreed that the financing of coal projects by the KfW banking group should be limited in future," a ministry spokesman said.

From 2006 to 2013 KfW lent 2.8 billion euros ($3.6 billion) to coal projects in countries from Greece to India, Serbia, South Africa and Australia.

"In future, financing for the construction and rehabilitation of coal plants will be completely ruled out and financing for the modernisation of operating coal plants will be limited and only available under clearly defined criteria," the minister's spokesman said.

Criteria Review
The environment, economy, finance, foreign and development ministries are working on defining the criteria for financing, he said. The government has told parliament it will complete its long-awaited review of funding criteria by this autumn.

Hendricks, from the Social Democrat party that shares power with Chancellor Angela Merkel's conservatives, has for months talked of curbing support for coal plants abroad. However, it takes time to reach agreement on policies which must be jointly decided by ministries controlled by different parties.

The environment ministry's move was driven by the aim of limiting global warming to an agreed ceiling of 2 degrees Celsius and the need to decarbonise global energy supplies by the middle of the century.

KfW says that its support for coal has been dwarfed by its investments in environmental protection but that it has continued provide support to give energy access to countries that cannot move away from fossil fuels immediately.

The German government is also working towards an agreement with OECD countries to ensure export guarantees for coal technology are compatible with the goal of limiting climate change.

(1 US dollar = 0.7768 euro)

(By Madeline Chambers, Editing by David Goodman)