Financial Restriction on Coal Assets September 8, 2016 Tokyo - - PowerPoint PPT Presentation

Financial Restriction

• n

Coal Assets

September 8, 2016 Tokyo Yoshihiko SAKANASHI Senior Counselor Electric Power Development Co., Ltd. (J-POWER)

Clean Coal Day in Japan 2016 International Symposium

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Key words

○ Financial/Debt Restriction ○ Governmental Finance, Private Indirect Finance ○ Asset Evaluation and Disclosure Rules ○ Communication

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Restriction by Multilateral Development Banks

• 1. Cut carbon

pollution in the US

• 2. Prepare the US

for the impacts of climate change

• 3. Lead international

efforts to combat climate change and prepare for its impacts

Putting restriction to financing of coal-fired power plants by Multilateral Development Banks

• World Bank Group: Energy Sector Directions Paper (July 2013)
• European Investment Bank: Evaluation guideline for fossil fuel

power projects (July 2013)

• European Bank for Reconstruction and Development: New Energy

Strategy (Dec 2013)

“The President’s Climate Action Plan” (June 2013)

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Arguments on Export Credits Policy

 Strict restrictions of export credits for coal-fired power plants had been raised in March 2014. “Building high efficient coal-fired power plants provide better solution to cope with climate change, since emerging countries need to rely on coal- fired power plants” (Japan, Australia, Korea) “Back off from government finance for those newly coal- fired power plants w/o CCS plan” (US, UK, etc.)

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OECD New Rule for Export Credits

 New arrangements agreed by OECD: Nov 2015  New rules taking effect: Jan 2017  The finance for high efficient coal-fired power plants, including USC, has been kept without any restriction.

Unit > 500MW Unit ≧ 300 to 500 MW Unit < 300MW

USC or emissions < 750 g-CO2/kWh

12 years 12 years 12 years

SC or emissions 750-850 g-CO2/kWh

Ineligible

10 years and only in IDA-eligible countries 10 years and only IDA-eligible countries Sub-C or emissions > 850 g-CO2/kWh

Ineligible Ineligible

10 years and only IDA-eligible countries

Maximum repayment terms

IDA: International Development Association

Source: OECD

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Names Contents Links Royal Bank

• f Scotland

・ Ended its lending to mining companies focusing on coal (Dec 2015) ・ Not finance to new tar sands projects (April 2016)

http://www.theguardian.com/envir

• nment/2016/apr/17/rbs-pulls-

fossil-fuel-investments-green- energy

JP Morgan

・ Prohibit finance development of greenfield coal mines ・ Prohibit finance of new coal-fired power plants in high income OECD countries

https://www.jpmorganchase.com/ corporate/Corporate- Responsibility/document/jpmc- environmental-and-social-policy- framework.pdf

ING

・ End financing of new coal-fired power plants and thermal coal mines worldwide ・ Not finance new clients with business over 50% reliant on coal-fired power plants or thermal coal mines

http://www.banktrack.org/show/n ews/ing_becomes_latest_bank_to_ stop_finance_for_new_coal

BNP Paribas

・ No longer finance coal mine activities w/o energy diversification strategy (Nov 2015)

http://www.bnpparibas.com/en/ne ws/press-release/bnp-paribas- dedicates-15bn-financing- renewable-energy-and-reinforces- its-carbon-r

Reported new policies of commercial banks

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Setting right track for energy finance?

○ Evaluation of “Stranded” Asset

・ Energy Market Design ・ Energy Industry Structure of Each Country

○ Information Disclosure

・ Framework and Rule

○ Communication

・ Expertise; Finance, Environment, Energy, Technology, Security, etc.

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Thank you very much for your attention.