G20 Summit: Indian banks ‘invest’ Rs 79,800 cr a year in coal
New Delhi: The G-20 governments have more than doubled the financial support they provide to coal power plants in just three years, despite pledging a decade ago to phase out subsidies to all fossil fuels, an independent study said on Wednesday.
India’s public banks invest Rs 79,800 crore per year in the coal sector, said the study published ahead of the G-20 summit in Japan on June 28-29.
The study from the Overseas Development Institute (ODI), Oil Change International (OCI), the International Institute for Sustainable Development (IISD) and the Natural Resources Defense Council (NRDC) tracks three types of government support provided by G-20 governments.
These are fiscal support, lending by public banks and investments made by state-owned enterprises.
According to the study, ‘G-20 Coal Subsidies: Tracking Government Support to a Fading Industry’, the annual support for coal production in the G-20 countries decreased from $1.7 billion in 2013-14 to $9.8 billion in 2016-17.
However, this was offset by an increase in annual support for coal-fired power production from $17.2 billion to $47.3 billion in the same period.
The combined government support of G-20 countries to coal stood at $63.9 billion per year in 2016-17.
In India, which will chair the G-20 in 2022, state-owned enterprises invested $6.4 billion (Rs 44,800 crore) per year and public banks lent $11.4 billion (Rs 79,800 crore) per year for coal projects in 2016-17, mostly in the coal power sector.
This is despite the fact that $27 billion (Rs 1,74,468 crore) worth of coal power assets are under financial stress and that India has made significant progress in reforming support for other fossil fuels, like gasoline, diesel and kerosene.
These investments lock coal into the energy system for decades and prevent countries from meeting their long-term G20 and Paris Agreement climate commitments, while also showing poor economic performance, said the report.
The International Institute for Sustainable Development’s Ivetta Gerasimchuk, one of the report’s co-authors, said: “In reality, government support to coal is much larger than our report’s numbers show, because many G-20 countries still lack transparency on the many ways they subsidize coal.”
“Our estimates also exclude the external costs of coal associated with air pollution, which are currently borne by the public.”
Christopher Beaton, IISD Senior Policy Advisor and the author of the India chapter of the report, said: “India’s coal power will face further challenges due to air pollution regulations, water scarcity concerns and competition from renewables.”
“But this situation can prompt India to re-think its support to coal and move beyond it to cleaner energy.”
The authors call for greater transparency by requesting G20 countries to conduct peer reviews of subsidies to coal and other fossil fuels by 2020.
G-20 countries should establish a regular process to track the removal of fossil fuel subsidies and share lessons learned from successful reforms.
Ending coal subsidies will bring environmental, social and economic benefits, while setting a level playing field for clean energy, said the report.