September 30, 2015 / 9:57 AM / 4 years ago

China 'highly polluting project' decision to spur coal subsidy talks

BRUSSELS/NEW YORK (Reuters) - China’s promise to curb public funding of “highly polluting projects” has isolated Japan and increased the pressure to close a deal to phase-out coal export subsidies after months of wrangling.

A worker stands on a wagon of a coal train as it tranfers coal to a power plant in Huaibei, Anhui province November 17, 2011. REUTERS/Stringer

The Paris-based Organisation for Economic Cooperation and Development has been hosting talks on the issue since last year.

Japan, wary of regional competition from China, has been at the vanguard of opposition to phasing out coal export credits that help OECD nations send coal plant technology abroad and benefit companies such as Toshiba Corp.

But on Friday in a joint U.S.-China statement on Climate Change, China signaled it would take similar steps to those already promised by the United States, the World Bank and others to end coal financing overseas.

“Japan will have difficulty in exporting coal technologies,” Mutsuyoshi Nishimura, special advisor on climate change to the Japanese government, said when asked about China’s change of stance.

In the joint statement, China promised to strengthen green and low-carbon policies “with a view to strictly controlling public investment flowing into projects with high pollution and carbon emissions both domestically and internationally”.

EU officials, speaking on condition of anonymity, said the statement needed to be clarified, but should inject momentum into negotiations that resume in Paris at the OECD on Nov. 16.

With time running out to get a deal before the U.N. climate talks start in Paris on Nov. 30 on an international pact on global warming, previous OECD coal talks ended in statemate at the start of this month.

Rache Kyte, the World Bank’s special envoy on climate change, told Reuters that China’s announcement was significant to the debate at the Paris-based club of developed nations.

“It is an important signal that China is part of an international community of investors that is trying to move in a cooperative way,” she said.

“It would be perverse for a country to use their development finance to invest in things that are not moving toward a lower-carbon trajectory.”

Environment campaigners say the statement isolates Japan and addresses concerns that China-dominated development banks might start lending to overseas coal projects if Western banks refused to help.

“Countries that don’t want an outcome can no longer make a facile argument that they will just lose market share to China,” said Steve Herz, a senior attorney for U.S. environment group the Sierra Club.

Editing by Adrian Croft

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