Opposition from Japan overcome in compromise agreement hailed as ‘major step forward’ by US officials, although not all export financing for coal will be eliminated

A compromise struck by the United States, Japan and several other major nations will restrict export financing to build coal power plants overseas, but not eliminate it completely.

The agreement reached on Tuesday is an important step forward that sends a strong political message ahead of upcoming international climate change negotiations in Paris, an American official and environmentalists said. Japan and the United States were long at odds on this issue.

The Obama administration announced in 2013 that it would end US financing for overseas coal power plants, and has been pressuring others to join. Japan was among those opposed to the move, arguing that its high-efficiency power plant technology is the best option for developing countries that need affordable energy.

Under the agreement, which takes effect in 2017, financing would still be allowed for the most advanced “ultra-supercritical” plants, and for some other plants in the very poorest countries. It was worked out by members of the Organisation for Economic Cooperation and Development, a Paris-based group of 34 countries including most of Europe and other key economies.

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“It’s been a very hard-fought compromise,” a senior Obama administration official told reporters on a conference call. “We regard it as a major step forward coming just less than two weeks before the start of the (climate talks) in Paris on 30 November.”

A Japan-based network of groups involved in fighting climate change welcomed the agreement, but said it was only a first step. “Even the highest-efficiency coal power plants emit a lot of CO2,” said Kimiko Hirata, the international director of the Kiko Network. Kiko means climate in Japanese.