We’re expanding our core capabilities and evolving new ways to partner with you. Make sure you follow us at… https://t.co/g1VkE0UlKB
US joins OECD allies in seeking an end to coal-fired power financing
The Treasury announced its plans the same day as more investors join an international effort to phase out financing of fossil fuel projects as governments gather in New York City for the UN General Assembly meeting, and ahead of the COP26 global climate change meeting in Glasgow, Scotland, in November.
At the OECD meeting, Treasury said the proposal will limit "official export credit support for coal power by expanding the scope of the commitments made in the "Sector Understanding on Export Credits for Coal Fired Electricity Generation Projects," a 2016 OECD guideline that direct export credit agencies (ECAs) on their backing of power generation projects.
"We encourage all our international partners to join us in ending public sector export finance support for coal power and shifting to renewable sources of energy," the Treasury said in a 14 September statement, adding that it was responding to President Joe Biden's 20 May order on climate-related financial risk.
No mention of oil or gas
The announcement made no mention of the US Treasury's stance on other fossil fuels.
A month ago, however, the US Treasury released guidance urging multilateral development banks to finance methane reduction as well as carbon capture, use and storage (CCUS) at existing fossil fuel projects and to end support for expanding or building new ones. Also, Treasury's Federal Insurance Office (FIO) issued a 31 August notice that seeks to better understand which data are needed to assess the climate risks faced by the insurance sector, what data remain unavailable, and how can it collect this data to make it available to stakeholders.
Critics, notably the nonprofit Friends of the Earth (FOE), said the latest announcement is insufficient to address the negative climate impact of ECAs, which provide government-backed loans, credits, insurance, and guarantees, if needed, for the international operations of corporations from their home country.
FOE joined the nonprofit Oil Change International in May in warning the ECAs of the UK, US, Japan, and other developed countries about the legal consequences of continuing to back fossil fuel projects elsewhere in the world.
"The US Export-Import Bank alone provides billions of dollars every year to fossil fuels, but the majority is to oil and gas, not coal, so this agreement will have little impact. What we need to see is the OECD export credit agencies end support for all fossil fuels," Kate De Angelis, international climate finance manager for FOE United States, told Net-Zero Business Daily in an email.
Set clear deadlines
Meanwhile, investors are stepping up their demands on governments to set clear deadlines for phasing out coal-fired project financing, investing in clean energy, and disclosing the risk that companies face from exposure to climate change.
Nearly 600 investors representing $46 trillion in assets as of 14 September, up from $41 trillion in June, exhorted governments around the world to remove fossil fuel subsidies, avoid building new coal-fired power plants, and to phase out coal-fired power generation by setting deadlines to limit global warming to 1.5 degrees Celsius, as the Paris Agreement sought.
As signatories to the 2021 Global Investor Statement to Governments on the Climate Crisis, the investors said governments need to mandate disclosures of climate risk in line with the Task Force for Climate-Related Financial Disclosures, while "incentivizing" private investments in zero-emissions solutions, ensuring ambitious pre-2030 action, and developing "just transition" plans for affected workers and communities.
If company disclosures about climate risk are unclear, then "it is very hard for investors to move money into the green economy," Kirsten Spalding, senior program director at Ceres Investor Network. Ceres is a nonprofit sustainable network of institutional investors and one of seven founding members of the Investor Agenda, which provides a common platform for investors to find and accelerate climate solutions towards a net-zero emissions economy.
"These policies are essential to support progress towards a net-zero economy and drive future investment in emerging technologies and infrastructure that could help limit global warming to 1.5°C. With COP26 looming, now is the time for governments to take action together," Stephanie Pfeifer, CEO of Institutional Investors Group on Climate Change, another of the founding members of the Investor Agenda, said in a statement.
- Canada eyes methane regulations for oil and gas sector as early as 2023
- US Supreme Court ruling may pave way for cofiring, CCS at coal-fired power plants
- US Supreme Court curtails federal authority to limit power plant GHGs through fuel switching
- Energy Charter Treaty “modernized” to reflect low-carbon transition needs after two years of talks
- Record-high prices forecast across global carbon markets, and still room for more
- Biden administration aims to finalize key climate rules before mid-term elections
- Filipino president’s nuclear revival plan faces regulatory, technical, financial hurdles
- Net-zero pledges reveal Global South-North divide in climate commitments: research