Some Coal Plant Exports Should get Financial Aid

European makers of equipment for coal-fired power plants should receive financial help to export it, an EU discussion paper seen by Reuters says, in a clash with the bloc's declared aim to lead the global fight against climate change.

Coal is the most polluting fossil fuel, emitting around twice as much carbon dioxide as natural gas when used to generate power.

As a result, the European Union is phasing out subsidies for domestic coal plants by 2018 and the European Investment Bank has set an emissions limit for the energy for which it provides preferential loans, meaning coal is excluded.

The United States, together with Britain and the Netherlands, has also pushed for a phase-out of coal export credits.

But the discussion paper drawn up by officials from the European Commission's trade department proposes that export credits, or preferential loans, continue for more-efficient technology.

Ahead of U.N. talks in Paris late this year on a possible global deal on climate change, the paper suggests as a compromise eliminating finance for coal-fired plants that use the least energy-efficient technologies.

For the rest it proposes reducing the maximum length for repaying loans to eight or 10 years, down from 12.

Environment campaigners say this is no better than business as usual because only the more efficient technology is exported, mostly to emerging economies, chiefly India.

"This is completely useless. The market has already determined that no one exports the least efficient technology," Sebastien Godinot, an economist at the WWF environment campaign group, said.

Environmental campaigners fear that an industry push to support growth and jobs means any argument that supporting coal hinders other EU policy goals will be swept aside.

In a briefing paper on coal finance, the WWF said countries around the world provided $7 billion over the period 2007-2013 for developing coal overseas.

Of this, export credit preferential loans accounted for some $5 billion, with Germany, followed by France, being the biggest provider in Europe.

France's Alstom previously said the risk of removing subsidies is that countries with no limits on coal plant financing would step in and could use less-sophisticated technology. It had no immediate comment on Thursday.

Siemens (SIEMENS.NS), another major European manufacturer of equipment for coal-fired power plants, did not immediately respond to a request for comment.

The European Commission, the EU executive, has a policy of not commenting on unpublished documents.

By Barbara Lewis