Climate finance rules still allow coal plants

The sprawling power station that hums and coughs along this coast in Indonesia is labeled as a Japanese contribution to the global fight against climate change.

But the Cirebon plant, built with Japanese financing two years ago, is not powered by the sun, the wind or any kind of renewable energy. It's fueled by the biggest source of carbon pollution in the energy system: coal.

Cirebon is one of three coal-fired power plants in Indonesia that Japan has helped fund with nearly $1 billion in loans earmarked as climate finance, or money provided by rich countries to poorer ones to tackle global warming. The plants promote new coal technology from Japanese companies, which is cleaner than old coal technology but still pollutes far more than solar, wind or natural gas. Villagers nearby also complain that the coal plant is damaging the local environment, and that stocks of fish, shrimp and green mussels have dwindled.

The money for coal highlights one of the biggest problems in the UN-led effort to fight climate change: A lack of accountability. Rich countries have pledged billions of dollars toward such financing in UN climate talks, which resume on Monday in Lima, Peru. Yet there is no watchdog agency that ensures the money is spent in the most effective way. There's not even a common definition on what climate finance is.

Japan, a top contributor of climate finance, denies any wrongdoing and has done nothing illegal.

However, even UN climate chief Christiana Figueres admitted she was unaware that Japan was building coal plants with climate money.

"There is no argument for that," Figueres said. "Unabated coal has no room in the future energy system."

The newly launched Green Climate Fund, a key channel for billions of dollars of climate finance in the future, also has only vague guidelines as yet 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.

"The point is to not invest money in things that have a negative impact on climate," Cedergren said.