Here is some great progress for the Treasury Department. We made these recommendations to Treasury a few months back, and it's great to see them put our recommendations into effect.
If you haven't read it yet, please check out the report we wrote on public international finance of coal-fired power plants, "Foreclosing the Future: Coal, Climate and International Public Finance."
From E&E News:
For the first time ever, the U.S. Treasury Department is preparing guidelines aimed at discouraging the World Bank from lending money to build coal-fired power plants.
In a blueprint that quietly appeared on the agency's Web site last month while world leaders met in Denmark to craft a new climate change plan, the Treasury Department calls on multilateral development banks to "remove barriers to and build demand for no or low carbon resources" that meet the power needs for developing countries.
It recommends supporting fossil fuel plants only if the banks are unable "after substantial effort" to help secure additional funding to pay for the lower-carbon alternative.
"The guidelines were developed in response to increased concern about climate change, a desire to strike the right balance between the goals of poverty alleviation and the global environment, and the need to be transparent," Treasury Department spokeswoman Natalie Wyeth said in an e-mailed statement.
Experts said the guidelines are essentially an internal Treasury Department policy paper that does not affect World Bank decisions. But it comes at a critical time as the bank tries to position itself as the main channel for billions of dollars in climate financing, and several sources said the guidelines are likely to cause consternation within the World Bank and among developing countries.
World Bank officials were not available for comment yesterday, and Treasury officials declined to discuss the guidelines in person.
Public funding for coal-fired power plants remains one of the most divisive issues for the World Bank. The institution has developed a new framework that calls for boosting renewable energy lending and screening new coal projects for climate impacts and cleaner alternatives. But despite a steady drumbeat of criticism, it has steadfastly refused to rule out lending for coal altogether.
The World Bank notes that it is primarily concerned with alleviating poverty. Dirty infrastructure projects, it and developing countries often argue, are sometimes the only way to bring energy quickly and cheaply to millions still living without power.
Environmental activists, meanwhile, praised the Treasury Department for developing the recommendations but pointed to loopholes in the language and questioned whether the political will exists to implement it.
"They're the first to issue this set of guidelines," said Athena Ballesteros, a senior associate at the World Resources Institute. "Doing that sends a very strong political signal that the U.S. is serious about helping support low-carbon development in developing countries."
But Ballesteros as well as advocates from the Bank Information Center, the Sierra Club and others told the Treasury Department in a series of written responses that the World Bank needs to account for the greenhouse gas emissions associated with its energy investments. The practice known as "carbon accounting" is the best way to integrate the cost of climate change into proposed projects, many said.
Bruce Rich, a senior adviser to the Sierra Club, said he questions the agency's definition of "low carbon," and noted that a World Bank loan last year for the rehabilitation of a coal plant in India was announced on the bank's climate Web page because the fixes were aimed at making the plant more efficient and emit less carbon dioxide.
"Of course, the lifetime emissions of the modernized plants would get an extension of over 20 years, a huge net increase of CO2, as opposed to letting the plants shut down as planned and channeling the money into true low-carbon alternatives," he said.
Agreed the Bank Information Center (BIC) watchdog group, "the implication of these policy loopholes is the potential justification for the financing of projects that would otherwise be phased out due to their obsolete generation technologies."
Yong Chen, a sustainable energy expert at BIC, called the guidelines "a positive step." But he added and others said the guidelines might have gone further in actively encouraging the World Bank to find and fund low-carbon energy projects.
"They are trying to push the bar higher without having too much trouble with the multilateral banks in how they're going to adopt them," Chen said. "It's not that useful, except for sending a signal."
The guidelines did not appear in the Federal Register, presumably because they do not affect U.S. government policy. Environmental groups said they met informally with U.S. Treasury officials late last year to discuss the development of the recommendations, and have been asked to submit comments.
Agency officials did not say whether they expect to revise the guidelines, but Wyeth wrote that the Treasury Department will work with other World Bank shareholders and staff "with the goal of operationalizing this guidance, recognizing we are but one shareholder."
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