The IFC has reportedly lent close to $5 billion to almost 88 financial institutions in India.
The International Finance Corporation (IFC), the private sector arm of The World Bank, has said it will not support investments in new coal projects.
The IFC funds banks and other financial institutions that in turn lend to infrastructure and energy projects. The IFC has reportedly lent close to $5 billion to almost 88 financial institutions in India.
“This year (2023) IFC, is taking the next step toward alignment with Paris Agreement ambitions… under which IFC will start requiring a commitment from financial institution clients to not originate and finance any new coal projects,” the lender said in a statement on its website.
In 2020, the IFC had unveiled a policy requiring clients to reduce their exposure to coal projects by half by 2025, and to zero by 2030, but did not prevent new investments. The latest update disallows this too.
“We filed the first ever case… over IFC’s support to a financial intermediary client backing coal in India in 2011,” noted Joe Athialy from the Centre for Financial Accountability. “It has taken 13 years for the IFC to finally end support for new coal. In the meanwhile, communities got scattered, their livelihood stolen, and the climate crisis made more severe, with nobody held accountable for all these, and more. We can only hope it moves faster to stop funding oil and gas,” he added.
India, which sources about three-fourths of its electricity from coal, has 28.5 GW of coal power capacity planned, about a third of which is already approved, and 32 GW of coal power capacity under construction. Tamil Nadu, Odisha, and Uttar Pradesh are the States with the highest capacities of coal power under development.
The bulk of investments in India’s prospective coal plants are by State utilities, said Sunil Dahiya, Analyst, the Centre for Research on Energy and Clean Air. “This is a significant commitment by the IFC. While private sector investment in new coal projects has been declining globally for some time, this should ideally prompt Indian State utilities to move away from new coal-fired plants and only fund those that are in advanced stages of construction,” added Mr. Dahiya.
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This article was originally published in The Hindu and can be read here.
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