Spending Bill Shouldn't Change U.S. Funding for Overseas Coal Projects

The U.S. budget bill takes the right steps toward restoring health and environmental safeguards for the American people and thanks to efforts by Democratic leaders key domestic climate action isn’t curtailed. But the bill includes some wrongheaded riders. Budget negotiators in the U.S. House inserted a rider into the U.S. spending bill that seeks to constrain President Obama’s commitment to end public financing of coal projects except in extremely rare circumstances. Scarce U.S. funding shouldn’t be used to subsidize coal and climate destruction. This rider doesn’t immediately impact U.S. efforts to end public financing of overseas coal projects, but this provision should be removed in future bills.

Since 2007, over $9 billion of U.S. funding has been used to support overseas coal projects through funding at the international development banks (e.g., World Bank and Asian Development Bank) and U.S. export agencies (e.g., Export-Import Bank), according to preliminary NRDC analysis.  President Obama committed in June 2013 to end public financing of overseas coal projects, except in extremely rare circumstances. Following this commitment, the Treasury Department issued guidelines that direct how the U.S. must vote at the international development banks, and the U.S. Export-Import Bank (Ex-Im) and Overseas Private Investment Corporation (OPIC) issued guidelines spelling out how these agencies would implement this commitment. With clean energy booming around the world these guidelines would allow these organizations to focus their scarce public investments on projects to build more wind, solar, and energy efficiency – not more coal projects.

And President Obama has been working with other countries – such as the Nordic countries and United Kingdom – to secure similar restrictions. This has made Japan and Germany – key holdouts – extremely uncomfortable as they are still too heavily invested in overseas coal.

The rider slipped in by the House negotiators in the dead of the night seeks to undercut this progress. It aims to force the U.S. to use limited public resources to subsidize overseas coal projects. It is wrong-headed, short-sighted, and a bad investment for American taxpayers. It sends a bad signal, but won’t have any noticeable impact in the near-term.

Luckily the staff at Ex-Im and OPIC have seen the short-sighted nature of continued investments in overseas coal projects and have focused investments on clean energy. Before the new guidelines the Ex-Im Board rejected a coal power plant in Vietnam so even without these new guidelines the Board understood that these types of projects are bad U.S. investments. There are currently no coal projects queued up at Ex-Im, but we’ll have to keep a watch on their portfolio over the remaining months of this fiscal year. OPIC hasn’t funded a coal project in years and this rider doesn’t impact the U.S. Treasury guidelines which guide how the U.S. votes at the development banks.  

This rider should not slow the transition away from public financing of overseas coal projects as clearly the agencies have shifted their attention elsewhere. If it stays in future spending bills it could cause real problems.

Riders like this are a clear sign of why Congress should stop attempting to change U.S. law in the dark of the night. This rider should be eliminated from future spending bills. These agencies have rightly decided to focus on clean energy investments that spur American jobs so these agencies shouldn't change their practices.

We've seen a growing shift globally away from public funding of coal, led by the US. This rider should not set back that part of President Obama's international climate agenda, including its efforts to secure commitments from other countries to end public funding of overseas coal projects that are driving climate change.