The European bank which funds international development around the world will stop paying for coal projects in a bid to cut carbon emissions.
The European Bank for Reconstruction and Development also announced it would stop funding oil exploration projects. It will only pay for oil development in exceptional circumstances where the investment would help reduce greenhouse gases.
The coal ban includes a cut in all financing for thermal coal mining and coal-fired electricity generation, the bank said today.
The EBRD, which is among the world’s largest international development lenders, has put decarbonisation at the forefront of its energy sector strategy for the next five years.
The bank will fund energy projects in 38 countries during over the period.
Nandita Parshad, the bank’s managing director for energy and natural resources, said the EBRD is in a perfect place to deliver a transition from the world's most polluting fuels.
She added: “Urgent and decisive steps are needed to address the challenges posed by climate change and poor air quality.
“This requires a fundamental shift away from hydrocarbons to cleaner energy sources.
“That means the electrification of economies, including industry, transport and heating, with that electricity generated overwhelmingly from renewable sources.”
The decision comes as world leaders meet for climate change talks in Katowice, the capital of a Polish coal mining district, in what is billed as the most important UN conference since the Paris climate deal.