Tokyo, November 18

A compromise struck by the US, 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 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 pact, which takes effect in 2017, financing would still be allowed for most advanced ‘ultra-supercritical’ plants, and for some other plants in very poorest countries. It was worked out by members of the Organisation for Economic Cooperation and Development (OECD), a Paris-based group of 34 countries including most of Europe and other key economies.

““We regard it as a major step forward coming just less than two weeks before the start of the (climate talks) in Paris,” a senior Obama administration official said.