Climate funds for coal highlight lack of UN rules

Coal Power Plant Emissions PEPWR

KANCI KULON, Indonesia (AP) - About $1 billion in loans under a U.N. initiative for poor countries to tackle global warming is going toward the construction of power plants fired by coal, the biggest human source of carbon pollution.

Japan gave the money to help its companies build three such plants in Indonesia and listed it with the United Nations as climate finance, The Associated Press has found. Japan says these plants burn coal more efficiently and are therefore cleaner than old coal plants.

However, they still emit twice as much heat-trapping carbon dioxide as plants running on natural gas. Villagers near the Cirebon plant in Indonesia also complain that stocks of shrimp, fish and green mussels have dwindled.

Japan's coal projects highlight the lack of rules to steer the flow of climate finance from rich to poor countries - a critical part of U.N. talks on global warming, which resume Monday in Lima, Peru. There is no watchdog agency that ensures the money is spent in the most effective way, and no definition of what climate finance is.

Japan, a top contributor of climate finance, denies any wrongdoing and has done nothing illegal - there are no rules against counting such projects as climate finance in the U.N. system.

"There are countries ... that cannot afford to have other methods than coal," Japanese Foreign Ministry spokeswoman Takako Ito said. "For these countries, we'd like to provide the best method of reducing carbon dioxide."

However, U.N. climate chief Christiana Figueres, who was unaware that the Japanese-funded coal plants in Indonesia were labeled as climate finance, said "there is no argument" for supporting such projects with climate money.

"Unabated coal has no room in the future energy system," she told AP. "Over time, what we should be seeing is a very, very clear trend of investment into clean renewable energy."

Even the newly launched Green Climate Fund, a key channel for climate finance in the future, still only has vague guidelines on how to spend the money. Board member Jan Cedergren said he didn't believe the fund would support fossil fuels but acknowledged no decision has so far been made.

In 2009, rich countries pledged that by 2020 they would provide $100 billion a year in climate finance. They agreed to come up with $30 billion over the next three years, with Japan providing about half.

An analysis of the 300 top climate finance projects during that period showed Japan was the only country to include direct support to new coal plants.

The second-largest project on the list was a $729 million loan for what Japan described as a "high energy efficient thermal power plant project in East Java." AP found that the loan from Japan's Bank for International Cooperation, or JBIC, was used to build an 815-megawatt coal-fired unit at the Paiton power plant, which is partly owned by Japanese firms Mitsui and Tokyo Electric Power Company.

Also among the top 30 projects globally was a $214 million JBIC loan for another "thermal power plant" in West Java, which AP confirmed was the Cirebon power station. The plant is co-owned by Marubeni Corp., a Japanese company that was fined $88 million this year by the U.S. Department of Justice for bribing Indonesian government officials to secure a separate power project.

Japan's climate finance also included a $15 million development loan for a plant in Indramayu, West Java, and a dozen smaller coal projects in India, Indonesia and Vietnam. Those were identified as coal projects in documents submitted to the U.N., while the larger projects in Paiton and Cirebon were not.

Japanese officials said there was no specific reason for that.

"We don't have anything to hide or disguise," a Foreign Ministry official said, speaking on condition of anonymity because he wasn't authorized to speak publicly on the topic.

Marubeni and Mitsui declined requests for comment. Tokyo Electric said transferring Japanese technology can lead to a substantial reduction in carbon emissions.

However, many climate scientists say even the new technology Japan promotes is not enough to meet the U.N. goal of keeping the global temperature rise below 2 degrees. The only way for the math to work with coal, they say, is through technology that sucks carbon dioxide from the air and stores it underground.

That expensive technology is not yet commercially available on a large scale, and neither Cirebon nor Paiton has it.

Although no environmental studies have been done, local fishermen in Kanci Kulon village near the Cirebon plant in West Java say their catches have shrunk. Daud, a 50-year-old fisherman who like many Indonesians only uses one name, said he used to bring in 45 crabs a day. Now the most he gets is 10.

"I believe this is because of the coal sludge" from the plant, he yelled, struggling to be heard over the jet-like roar from the power station.

Cirebon officials told AP journalists touring the site that the plant is safe and denied that any sludge is released into the Java Sea. Heru Dewanto, vice president of the utility that runs Cirebon, acknowledged that the plant had caused some problems for "200 to 300 green mussel farmers or fishermen," but noted that it also provides electricity to half a million homes.

Edi Wibowo, Cirebon's senior environmental engineer, said emissions from the plant were between 856 and 875 grams of carbon dioxide per kilowatt hour of energy produced - 20 percent lower than from an old coal plant. That compares with 600 to 700 for oil, 400 for natural gas, and near zero for renewables like solar and wind power.

Unlike Japan, the U.S. and many other rich countries have cut public funding for coal projects in developing countries. Germany still supports such projects, but doesn't count them as climate finance.

Most environmental groups weren't aware Japan was using climate finance to build coal plants.

"Climate finance is such a mess. It needs to get straightened out," said Karen Orenstein of Friends of the Earth. "It would be such a shame if those resources went to fossil fuel-based technologies. It would be counterproductive."

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