OECD: Coal Export Subsidy Deal Elusive

OECD has sought deal to phase out subsidies for a year. Germany, Japan at forefront of opposition.

The world's richest nations are unlikely to reach a deal to phase out subsidies for coal exports at talks in June, reducing the chances of a new global climate change agreement at a U.N. conference in Paris, officials and campaigners say.

The export credits help developed nations supply coal-fired generation and mining technology to poor nations, a practice critics say harms attempts to lower greenhouse gas emissions.

The Paris-based Organisation for Economic Cooperation and Development (OECD) has been seeking for a year to agree to phase out export credits for coal, the most polluting fossil fuel.

But officials and campaigners said a breakthrough would be difficult when the issue is raised at ministerial level next week and at a meeting of the OECD's coal export credit group set for June 9-12. The OECD was not available for comment.

There would still be a chance of an accord before the Paris U.N. conference that starts on Nov. 30, the officials said, but only if the June talks make enough progress to justify an extraordinary OECD meeting in July or September.

One European Union official, speaking on condition of anonymity, said the EU hoped to "nudge forwards" the debate, but that within the EU, Germany was an obstacle, while Japan was the main opponent in the OECD as a whole.

France, as host of the U.N. conference, wants to allow coal export credits only for technologies that are able to capture and store the carbon emissions, which Germany says is unrealistic, arguing instead for ending support for the least efficient equipment, the officials said.

Users of export credits, such as France's Alstom, say they lower global emissions because developed world coal technology is more efficient than that typically used in nations such as India.

Rachel Kyte, World Bank Group vice-president and special envoy for climate change, told Reuters new coal-fired power plants could occasionally be justified in the least developed countries when a significant part of the population had no other options.

"For conflict-affected states, where fragility is really an issue as well, then you are consistently weighing up the need for short-term energy access," she said.

Environment campaigners such as WWF say coal technology can only be exported on condition its carbon emissions are captured and prevented from entering the atmosphere.

If there is no OECD-wide deal, WWF said it would press for commitments from individual countries and the EU as a whole.

"Failure to agree would mean keeping the status quo of the obsolete OECD pro-coal policy -- a total shame for the rich countries in the year of the Conference of the Parties (U.N. talks)," WWF economist Sebastien Godinot said.

Although German Chancellor Angela Merkel is pushing for low carbon energy, she faces opposition to reducing support for coal from heavy industry, viewed as vital to the German economy.

Japan has enjoyed mullti-billion-dollar revenues from coal technology shipments, benefiting companies such as Toshiba Corp.

By Barbara Lewis and Susanna Twidale