U.S. President Barack Obama thought he had put an end to the overseas financing of big coal-fired power plants, but American support for coal plants abroad could be making a comeback.
The pledge by Obama to end support for coal plants came in a landmark June 2013 speech, where he unveiled his “Climate Action Plan.” Along with other steps, including limits on greenhouse gases from domestic power plants, Obama promised to end financial support for the construction of coal plants overseas.
The U.S. has long supported coal plant construction through the Export-Import Bank (Ex-Im), an agency of the federal government that provides loans to foreign governments and companies to purchase American-made goods. Ex-Im usually provides credit for the purchase of major industrial goods, such as airplanes, farm equipment, and – until the White House unveiled its climate action plan – coal-fired power plants.
Several major international financial institutions followed Obama’s lead and ended financial support for coal projects, including the World Bank, the U.S. Trade and Development Agency, the European Investment Bank, and the European Bank for Reconstruction and Development (EBRD).
As these powerful banks pulled their support, prospects for coal’s growth around the world took an immediate hit. “We’ve never seen a cascading sentiment that coal is not acceptable like we’re seeing happen right now,” Justin Guay, the head of the Sierra Club’s international climate program, said in a Bloomberg News interview last year. “It’s a snowball running downhill.”
But U.S. financial support for coal overseas may not be dead yet. At issue is the renewal for the charter of the Ex-Im Bank, which will expire on September 30 if Congress does not vote to approve an extension.
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A growing block of Tea Party conservatives are seeking to end the bank’s charter because they view its existence as a symbol of corporate welfare. The Heritage Foundation, which is leading the charge against the bank, argues that Ex-Im “is a conduit for corporate welfare beset by unreliable risk management, inefficiency, and cronyism. Terminating the bank’s charter should be an easy call for lawmakers.”
The push against Ex-Im has also won support on Capitol Hill among some mainstream Republicans.
But now, some powerful coal allies are stepping in. According to The Hill, Senator Joe Manchin (D-WV) is sponsoring a bill that would “reverse Ex-Im guidelines that prevent financing for overseas power plants that decline to adopt greener technology,” while at the same time reauthorizing it for another five years. He has gained the support of another Democrat, Senator Heidi Heitkamp of North Dakota.
Many Democrats in Congress, along with a coalition of big business groups like the U.S. Chamber of Commerce, were already supporters of Ex-Im. If the bank’s reauthorization also comes with a provision attached to allow the U.S. to resume financial support for coal projects abroad, it could tip the balance in favor of renewing Ex-Im’s charter.
That’s because the coal provision could provide enough political cover for Republicans to block Tea Party demands to kill the bank.
But it’s not clear if Obama would sign the legislation, if it passed. His administration has been a big supporter of the Bank, but agreeing to erase a key pillar of his climate plan to renew its charter may be too high a price to pay.
By Nick Cunningham of Oilprice.com