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G20 pledges to end finance for overseas coal plants

G20 leaders have sealed a deal to end international financing of coal power in a boost ahead of the opening of the COP26 climate summit.

Leaders at a G20 summit in Rome agreed to end financing for coal-fired power plants overseas by the end of this year, according to the final text of their communiqué. But they stopped short of agreeing an end to domestic coal power in their own countries.

The agreement, which follows heated debate and opposition from coal-dependent countries including Turkey and Russia, will curb the construction of new coal plants, particularly in the developing world.

Global agreement to restrict financing for the fossil fuel has been one of the main targets for the G20 ahead of the COP26 meeting in Glasgow, which starts today. Its British hosts have said they want to “consign coal to history”. 

The G20 countries committed themselves to take steps to limit global warming to 1.5C ideally and adopt new climate targets this decade, according to a copy of the leaders’ communiqué seen by the Financial Times. The final document is expected to be published later on Sunday.

However, G20 leaders failed to agree on phasing out domestic coal plants and their communiqué also lacks a date for phasing out “inefficient fossil fuel subsidies”, which was one of Italy’s original goals for the summit.

“The climate crisis is the defining issue of our times,” Italian prime minister Mario Draghi told other G20 leaders on Sunday. “The decisions we make today will have a direct impact on the success of the Glasgow Summit and, ultimately, on our ability to tackle the climate crisis. But the COP26 must signal the start of a permanent campaign.”

The issue of ending state financing for building coal power plants overseas — a policy that has already been endorsed by China, Japan and most European countries — was a key sticking point, according to people close to the talks.

The summit had already reached broad agreement on Saturday on vaccines and taxes while the US and EU also struck a deal over steel tariffs on the sidelines of the meeting.

The provision on ending coal finance also applies only to “unabated” new power generation abroad, which means coal plants that include emissions-reduction technology, such as scrubbing carbon dioxide from the smokestack, could still be financed.

But after days of exhausting negotiations, negotiators were jubilant on Sunday that a deal had been reached.

Negotiators erupted in applause on Sunday morning when a section of the communiqué was agreed that referenced limiting global warming to 1.5C — the first time it had been mentioned in a G20 leaders’ official statement. Global warming since pre-industrial times is already estimated at 1.1C.

The Paris climate accord, which is signed by all G20 members, aims to limit global warming to well below 2C, with best efforts made to keep rises to 1.5C, which is a much harder target.

Early on Sunday leaders walked in Rome’s historic centre and posed for photographs in front of the Trevi fountain as negotiators continued to haggle over the final text.

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