Treasury Department Quietly Kicks Coal to the Curb

via Wikimedia Commons

via Wikimedia Commons

Back in June, the administration released details of President Obama’s Climate Action Plan. One aspect of the plan is to tilt public financing towards clean energy and to end U.S. government support  for the public financing of new coal plants overseas.

The Department of the Treasury recently issued guidance on implementing that part of the president’s plan. The guidelines are intended to level the playing field for clean energy alternatives and to promote low-emission power generation. The plan accomplishes this goal by ending U.S. support for coal plant funding by multilateral development banks. From now on, the U.S. will not support such projects at all in wealthy countries unless they employ carbon capture and sequestration technologies. In the world’s poorest countries, the U.S. will support only the most efficient coal technology available and only where no other economically feasible alternative exists. The U.S. is the largest shareholder in development banks like the World Bank, the Asian Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development. While the U.S. is in no position to impose its policy on the banks by diktat, the new Treasury guidelines will likely exert considerable pressure to scrub coal plant funding from the banks’ agendas.

The U.S. isn’t going it alone in reining in funding for new coal plants. The World Bank itself has announced that it will limit financing for new plants to “rare circumstances” where countries have no alternative. The leaders of  Denmark, Finland, Iceland, Norway and Sweden joined Obama in Stockholm in September in pledging not to fund any more coal projects.

The Treasury guidelines will have no effect on private financing, of course. And political pressure in favor of burning coal is intense, not just in the U.S., but in India and, of course, China – the world’s most voracious consumer of coal. Indeed, the Treasury action is a reflection of the intense political battle being waged in Washington, and arises out of Obama’s reliance on administrative measures to chip away at carbon emissions in the face of Republican obstruction in Congress. In this case, Obama and the Treasury appear to be taking a page from Teddy Roosevelt’s playbook: they’re walking softly and carrying a big stick.

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