Biden Administration Ends Coal Money Abroad
In a cable sent to US embassies last week, the Biden Administration signaled an end to federal financing for new fossil fuel projects abroad. The new directive puts renewable energy definitively above fossil fuels for international financing. While the announcement is part of the administration's focus on climate change, it comes with some caveats. Exceptions to the ban on funding include:
- National security concerns
- Expanding energy access
- Projects already underway
Additionally, the ban has no bearing on the use of federal funds for domestic fossil fuel infrastructure on US soil.
Sky News: What you need to know about coal, November 4, 2021.
Why This Matters
An end to US financing for fossil fuel infrastructure is a positive step toward the massive ramp down of coal, gas, and oil use necessary to avoid the worst impacts of the climate crisis. In the past five years alone -- with a Trump Administration that prioritized coal -- the US International Development Finance Corporation (DFC) spent $4 billion on foreign fossil fuel projects.
The cable, obtained by Bloomberg, makes good on a promise made by the US and 40 other countries at November's COP26 to stop funding fossil fuel projects abroad by 2022. The text of the memo emphasizes a clean energy future: "Our international energy engagement will center on promoting clean energy, advancing innovative technologies, boosting US clean-tech competitiveness and providing financing and technical assistance to support net-zero transitions around the world."
No Domestic Fossil Fuel Bans Yet
Despite the renewable energy approach aboard, the US is still invested in its own fossil fuel industry at home. In Congress, passage of the Build Back Better Act, which includes plenty of measures to take on the climate crisis, depends on the vote of Senator Manchin of coal-rich West Virginia. The bill offers billions in tax credits for coal plants capturing and storing carbon emissions. The tax credit has significantly increased in size to the point that payouts could cover the cost of a coal plant's corporate income tax bills, according to comments by ExxonMobil lobbyist Erik Oswald.
