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The US announced plans 14 September to join Canada, the EU, South
Korea, Norway, Switzerland, and the UK in seeking an end to
"official export financing support for unabated coal power." The US
Department of Treasury will formally introduce the proposal at the
15 September meeting of the Organisation for Economic Co-operation
and Development's (OECD) Participants to the Arrangement on
Officially Supported Export Credit, a "gentleman's agreement" signed in 1976 to foster a
level playing field and to encourage competition among exporters.
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.
Posted 14 September 2021 by Amena Saiyid, Senior Climate and Energy Research Analyst
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