November 1, 2013
This week, the US Treasury Department issued revised guidelines on US support for coal projects proposed through multilateral development banks. It is intended to reflect President Obama’s June 2013 Climate Action Plan that commits to reduce public finance for new coal-fired power plants overseas save in exceptional circumstances. The guidance falls far short of the outright ban on public finance for coal that is needed. The United States will support new coal plants in middle-income countries if the project meets certain requirements, including use of the best internationally available technology, deployment of carbon capture systems, and an accompanying package of carbon offsets in the power sector. For lower income countries, the United States could support coal projects that do not use best available international technology if the project overcomes “binding constraints” on economic development. The project would employ best available technology that is “practically feasible” instead.
The guidance provided by Treasury is a reflection of both the strengths and weaknesses of the Climate Action Plan. While the restrictions to invest public money in new coal plants abroad is certainly a step in the right direction, these measures do not demonstrate the real climate leadership the world needs right now. The guidance makes allowances for using less-than-best technology in lower-income developing countries, which is precisely where better technologies are most needed. Lowering standards to make way for “development” in the world’s poorest communities is simply the wrong way to alleviate poverty. Furthermore, the guidance promotes continued investment in costly, risky, and unproven carbon capture systems despite the numerous and serious concerns that have been raised about those systems.
Ultimately, the guidance takes us closer to ending US finance for new coal plants abroad, but it does not sufficiently protect the interests of communities that will be most affected by coal projects or the resulting impacts of climate change. A first test of the revised guidelines will likely be the proposed new power plant in Kosovo under consideration at the World Bank.
More information:
- Full Text: Treasury Guidance Language
- Treasury Department Press Release: U.S. Takes A Significant Step Toward A Clean Energy Future
- Article in Bloomberg: U.S. Toughens Conditions to Back Development Loans for Coal
- White House fact sheet on President Obama’s June 2013 Climate Action Plan
- CIEL Statement on President Obama’s Climate Action Plan: https://ciel.org/Climate_Change/Obama_Climate_25Jun2013.html