The conclusion of a new OECD compact on financing high technology coal-fired power plants underlines the fundamental role that coal will play in a low emissions global economy.

A new OECD arrangement will encourage export credit agencies in developed economies to direct financing support to new coal fired technologies known as High Efficiency Low Emissions (HELE) coal plants. The compact will discourage support for higher emitting ‘subcritical’ coal plants.

The global and Australian coal industries has long advocated for policy measures to encourage the broader adoption of these HELE plants which produce 40 to 50 per cent lower CO2 emissions than conventional plants.

This new agreement will reinforce a trend toward these plants that is well underway especially in East and South Asia - the source of most global demand for energy over coming decades.

These technologies are already transforming power generation in East and South Asia and now account for nearly 40 per cent of Asia’s coal fired electricity capacity up from negligible levels just 7 years ago.

In recent years, more than 670 of these modern coal units have been built in just 10 Asian nations. Another 1066 of these units are under construction or planned, according to the International Energy Agency’s Clean Coal Centre.

In China alone, the embrace of these technologies has resulted in an annual reduction in CO2-e emissions of 450 million tonnes. To put that into context, this environmental dividend is 5 to 10 times larger than the emissions reductions achieved by the European Union Emissions Trading Scheme.

Estimates suggest that, in Asia alone, the transition to HELE plants has the potential to slash 2 billion tonnes from global emissions annually.

The agreement is good news for Australia, not least because these ‘HELE’ plants require higher quality coal which is Australia’s speciality. The nature of Australia’s high energy coal means that it further reduces emissions by 10 to 20 per cent. This is why the 2015 IEA World Energy Outlook released earlier this month predicted that Australian coal exports would grow by 37 per cent by 2040.

The reported improvements to the agreement secured by the Turnbull Government and South Korea ensure that the new arrangements will not have perverse outcomes, including by pushing poor nations to seek alternative financing arrangements and higher emitting plants.

The revised text will help ensure that the countries with electrification rates under 90 per cent (i.e. where more than 10 per cent of the population has no electricity) will continue to have access to have access to export credits for so-called ‘supercritical’ plants.

With 17 per cent of the world’s population still without access to energy, earlier proposals risked delaying the provision of affordable energy to some of the world’s poorest people.

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