Coal in China

Hunter HoganCoal processing in China.

The World Bank says it cares about climate change, so why is it providing loans to help developing countries build coal power plants? Same goes for America’s support for coal plants abroad.

In recognition of this glaring climate policy disconnect, both the World Bank and the Obama administration appear to be finally backing away from  financial support of such dirty energy enterprises.

From Bloomberg:

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The World Bank plans to restrict its financing of coal-fired power plants to “rare circumstances,” according to a draft strategy that reflects the lender’s increased focus on mitigating the effects of climate change.

The Washington-based lender will help countries find alternatives to coal, according to the draft obtained by Bloomberg News which lays out the bank’s policy on lending to its member countries. The paper, which is subject to revision, describes universal access to energy as a priority for the World Bank’s mission to help end poverty.

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The bank “will cease providing financial support for greenfield coal power generation projects, except in rare circumstances where there are no feasible alternatives available to meet basic energy needs and other sources of financing are absent,” according to the report. Greenfield is a term for a new facility. …

The World Bank, which lends to the developing and emerging economies among its 188 members countries, committed $8.2 billion to finance energy projects in the 12 months through June 2012, according to its website. Of that, $3.6 billion was for renewable energy.

But agreement on the proposal by the bank’s board is no sure thing, The Washington Post warned:

In the past, proposals to restrict coal finance have been blocked by countries like China. But the vision fits with World Bank President Jim Yong Kim’s push to address climate change. The lender hasn’t funded a coal project since offering South Africa a $3 billion loan in 2010 to build a large power plant near Johannesburg.

The Post points out that Obama’s recent climate change speech included a little-noted reference to a similar policy shift in the U.S. From the same article:

“Today, I’m calling for an end to public financing for new coal plants overseas unless they deploy carbon-capture technologies, or there’s no other viable way for the poorest countries to generate electricity,” Obama said in his speech at Georgetown University on Tuesday.

Those restrictions will most heavily affect the U.S. Export-Import Bank, a government-backed lender that acts to boost American sales overseas. Over the past five years, the bank has provided aid for a handful of large coal plants, including $805 million for a 4,800-megawatt plant in South Africa and $917 million for a 4,000-megawatt facility in India. The lender said each of those loans helped support hundreds of American jobs, from engineers to coal miners.

And there’s at least one coal project currently in the pipeline: The Ex-Im Bank has been reviewing a proposal for a 1,200-megawatt plant in Vietnam.

Environmentalists have long criticized the federal government for providing billions to finance fossil-fuel projects overseas, particularly at a time when the United States has pledged billions in foreign aid to help developing countries deal with climate change.

The U.S. is taking important steps to cut its use of coal, but those efforts could be overshadowed unless coal use is curbed in India, China, and the rest of the world.