Financial Flows for the Development of Coal-Fired Power Plants

Regardless global agreements on climate change the world sees a renaissance of coal, foremost driven by countries in South, East and South-East Asia. The development of new coal fired power plants is often conducted by means of international financial support from banks and investors. We analyse these financial flows between countries and regions for direction, regional patterns, magnitude, drivers and occurring emissions. While many Non-Annex I countries, e.g. China and India, are known for extensive construction of plants, we find that other countries, especially Annex I parties like the United States, Western European countries and Japan, play major roles in providing financing and investment for coal-fired power plants. The data furthermore displays a trend towards more foreign participation in the development of new plants which we follow up by examining the relationship of DI and OFDI in the sector. The question of responsibility of different countries (especially Annex I parties) is analysed by calculating the respective emissions from financing of coal plants. Based on the results we examine feasible policy instruments to cease international financial flows.