U.S. Says It Won’t Back New International Coal-Fired Power Plants
WASHINGTON — In an aggressive move to impose President Obama’s environmental policies overseas, the Treasury Department on Tuesday largely declared an end to United States support for new coal-fired power plants around the world. The decision means that Mr. Obama’s administration will no longer contribute to coal projects financed by the World Bank and other international development banks.
“What we’re trying to do is to use the leverage associated with public finance to help developing countries move in the direction of cleaner energy,” said Lael Brainard, the under secretary for international affairs at the Treasury Department.
It is unclear how much impact the new policy will have. The United States does not have a veto over which projects in other countries get financed through organizations, and the number of coal plants built overseas with public money is small relative to the number that are likely to be built with private investment.
By leading a coalition of like-minded countries — including several European ones that have already announced similar intentions — officials said the administration would be able to influence the direction of power plant construction.
“We believe that if public financing points the way, it will then facilitate private investment,” Ms. Brainard said.
But coal makes up only about 10 percent of the World Bank’s “energy portfolio,” said a spokeswoman, Fionna Douglas, who added, “We’re actually doing four times more in renewable energy and energy efficiency than we are in coal.” The bank decided in July to restrict financing of new coal projects sharply, she said.
The World Coal Association estimates that there are more than 2,300 coal power plants around the globe, including about 620 in China alone. Treasury officials said the new policy would have affected at least three of those power plants that were financed in recent years by organizations like the World Bank.
Officials said the new policy would put countries around the world on notice that the United States will almost never help finance new coal plants unless they are the only option for desperately poor countries or they include technology that reduces emissions.
Treasury officials said the United States would also seek to push private investors to favor energy technologies that are better for the environment.
That sense of paternalism toward much of the developing world is almost certain to provoke anger in countries where stable, consistent power is fleeting and where coal can provide a cheap solution.
Frank V. Maisano, an energy specialist at Bracewell & Giuliani, a law firm that represents energy companies, said the announcement by Treasury officials was not consistent with Mr. Obama’s promise to help developing countries plug in to the world’s electric grid.
While traveling last summer in Africa, Mr. Obama announced a “Power Africa” initiative to try to double access to electricity across the continent.
“The realist says that if Africa is going to double its access to power, then coal is going to have to play a significant role in that,” Mr. Maisano said. He added that he was “not surprised that the administration, in all corners and in all areas, is trying to act consistently to undermine the use of coal.”
Officials said they expected objections from some of the world’s developing countries, where coal might be a cheap option. But they said the new policy would encourage those countries to seek alternative and more sustainable ways to generate power.
The new approach to coal around the world is an outgrowth of Mr. Obama’s Climate Action Plan, announced in June, which established goals for fighting climate change during the president’s remaining three years in office.
The Environmental Protection Agency recently announced lower emissions standards for new coal power plants that would require technology called carbon capture and sequestration.
In the United States, those new emissions standards face a difficult period of public review from energy companies and lawmakers from coal-producing states. But overseas, the administration has more latitude to pursue Mr. Obama’s agenda.
Treasury officials said the new policy on overseas coal plants was an effort to use the outsize role that the United States plays in helping to finance infrastructure projects through groups like the World Bank.
Treasury officials said that the United States would continue to urge the world’s poorest countries to avoid building coal power plants.
But they said that in a few cases, the United States might agree to help fund such a plant if there are no other viable possibilities for bringing power to an area.
Officials also left open the possibility of financing coal plants that meet strict emissions standards. In the United States, the E.P.A.’s new rules require that any new coal plant emit no more than 1,100 pounds of carbon dioxide emissions per megawatt-hour, just slightly more than a natural gas power plant. The new Treasury rules would permit financing of a new coal plant abroad that also meets those standards.
BY Michael D. Shear