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Financing Coal
Coal financing refers to the financial support provided for coal-related projects, encompassing coal mining and coal-fired power plants. Its role in shaping the global energy landscape and its environmental and climate impacts have made it a subject of concern. The misalignment of coal financing with international climate objectives, particularly the Paris Agreement, has garnered attention. ​

The Paris Agreement aims to restrict global warming to well below 2 degrees Celsius and ideally limit it to 1.5 degrees Celsius. Achieving these goals necessitates a substantial reduction in coal-related activities. ​

Studies, including Chen et al.'s finance-based accounting of coal emissions, have revealed a misalignment of coal financing with climate objectives. Major nations, such as China, Japan, and the U.S., have extended financial support to overseas coal power infrastructure. This support has led to significant long-term climate and financial risks and harms the objectives of reducing CO2 emissions set by the Paris Agreement, of which China, the United States and Japan are signatories. A substantial portion of the associated CO2 emissions is anticipated to occur after 2019. ​

Coal financing poses challenges to the global decarbonization of the power generation sector. As renewable energy technologies become cost-competitive, the economic viability of coal projects diminishes, making past fossil fuel investments less attractive. To address these concerns and align with climate goals, there is a growing call for stricter policies regarding overseas coal financing. Countries, including Japan and the U.S., have faced criticism for permitting the financing of certain coal projects. Strengthening the policies, potentially by banning public financing of coal projects entirely, would enhance their climate efforts and credibility. In addition, Enhanced transparency in disclosing financing details is crucial for evaluating their environmental impacts. ​