Several major economies including the US, EU and Japan have agreed to restrict public financing for coal-fired power plants in other countries.
Under the deal struck by the members of the Organisation for Economic Co-operation and Development (OECD), export financing for the “least efficient” coal power stations will be limited.
However funding would still be allowed for smaller, “sub-critical” plants in poorer, developing countries as well as for up to medium-sized “super critical” plants in countries facing energy poverty challenges.
Restrictions on support will not apply to any plants equipped with carbon capture and storage.
The new agreement encourages both exporters and buyers of coal-fired power plants to move away from low efficiency technologies, the OECD stated.
Its export credit committees have been reviewing the regulations for coal plants since November 2013.
David Drysdale, Head of the export credit division in the OECD’s trade and agriculture directorate said: “These new rules will substantially limit official export credit support for new coal-fired power plants and mark a major contribution to international efforts to combat climate change.”
The new rules will come into effect from January 2017.
Last week UK Energy Secretary Amber Rudd announced coal-fired power plants in the country will be shut down by 2025.