The “war on coal” may be coming to a poor country near you. The Obama administration is pushing international lending institutions to stop funding the construction of coal plants around the world in the name of fighting global warming.
The Treasury Department announced on Tuesday that it would refuse to fund coal projects through international development agencies if they don’t meet the same environmental standards imposed on new coal plants being built in the United States.
“As developing economies embark on a journey towards a clean energy future, today’s announcement marks an important step in helping them reach this goal,” said Lael Brainard, the undersecretary for international affairs at the Treasury Department. “By encouraging the use of clean energy in multilateral development bank projects, we are furthering the U.S. efforts to address the urgent challenges of climate change.”
However, proposed regulations by the Environmental Protection Agency effectively ban the construction of new coal-fired power plants unless they utilize carbon capture and sequestration (CCS) technology — which is not commercially available.
Only the poorest countries where “there’s a material development impact and there are no alternatives” will be able to get U.S. support for coal plants. A narrow exemption from the ban on coal plant funding as the countries must also use the best available technology
“Following the lead of its colleagues at the EPA, the Treasury Department’s decision to halt public financing of coal projects overseas makes it clear the President not only wants to raise electricity prices for Americans here at home, but he also wants the poor of the world to live in perpetual darkness,” said Laura Sheehan, spokeswoman for the American Coalition for Clean Coal Electricity.
President Obama promised to cap financing for international coal projects in July as part of his plan to curb greenhouse gas emissions. Soon after his announcement, the World Bank announced that it would cap its financing of coal projects in all but the poorest countries.
A test of that commitment will come when the bank decides whether or not to fund a coal project in Kosovo — a poor country that suffered a destructive war in the 1990s. The Kosovo plant would be the first coal plant to receive World Bank support since 2010, but the project is heavily opposed by environmentalists.
“Kosovo doesn’t meet the test of the president’s action plan,” said Nezir Sinani, a climate change coordinator at the Bank Information Center, a sustainable development group. “This is the test case and all eyes are on the U.S. government to see if they are serious.”
Other international lending institutions could follow suit, including the International Monetary Fund. The IMF’s managing director Christine Lagarde has been an enthusiastic proponent of punishing carbon emissions to tackle global warming. Earlier this year, the group put out a study that advocated for a tax on carbon dioxide emissions.
“So we need growth, but we also need green growth that respects environmental sustainability. Good ecology is good economics,” Lagarde said. “This is one reason why getting carbon pricing right and removing fossil fuel subsidies are so important.”
“Much like the Administration has done at home, the President’s most recent action will force the poorest countries to face crippling electricity bills at the cost of political legacy,” Sheehan added.
However, even without international assistance coal is still expected to play a major role in world energy use in the years to come. Coal is expected to top oil as the world’s most widely used fuel source by 2017 as demand rapidly rises in Asia Europe.
The World Resource Institute projects that nearly 1,200 coal plants are being planned for construction globally — more than 1.4 million megawatts of power. The vast majority of these coal plants will be built in India and China.
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