US administration halts funding for new carbon-intense projects overseas

By Amirtha P S, Desk Reporter
  • Follow author on
Carbon Emissions
Representational Image

The administration of US President Joe Biden has ordered an immediate halt to new federal support for coal plants and other carbon-intensive projects overseas, a key policy modification created to fight climate change and accelerate renewable energy globally.

The wide-ranging directive for the first time prohibits US government agencies backing for future ventures, potentially affecting billions of dollars in annual funding as well as diplomatic and technical assistance. The administration has been instructed to prioritize global collaborations to deploy clean energy technology.

The US government engagements should reflect the goals set in an executive order issued at the start of the year aimed at ending American financial support of coal and carbon-intensive energy projects overseas.

The policy contains significant exemptions, including for compelling national security concerns, foreign policy considerations or the need to expand energy access in vulnerable areas. It also does not apply to existing projects, including some the US has supported under multiple administrations.

“The goal of the policy is to ensure that the vast majority of US international energy engagements promote clean energy, advance innovative technologies, boost US cleantech competitiveness, and support net-zero transitions, except in rare cases where there are compelling national security, geostrategic, or development/energy access benefits and no viable lower carbon alternatives accomplish the same goals,” as per government sources.

The policy defines “carbon-intensive” global energy engagements as projects whose greenhouse gas intensity is above a threshold lifecycle value of 250 grams of carbon dioxide per kilowatt-hour and includes coal, gas or oil.

As per the new orders, the US government bans financing of overseas coal projects that do not capture or only partially capture carbon emissions, allowing federal agencies to engage in coal generation only if the project demonstrates full emissions capture or is part of an accelerated phaseout.

The new policy formalizes the goals set by the administration in earlier executive orders and policy guidances and is reiterated in multilateral forums such as the G7 meeting and the UN climate summit.

At the UN climate talks in Scotland, the Biden administration had pledged with 40 countries and five financial institutions to end new global finance for unabated fossil fuel energy by the end of 2022, except in limited cases.

Environmental groups said the policy, for which they have long advocated, is a step in the right direction but creates loopholes that could undermine its goals.

Related: Abu Dhabi’s Masdar inaugurates its 1st wind farms in Poland