The Trouble With the Global War on Coal

A new U.S. strategy aimed at limiting public investment in coal-fired power plants worldwide may do little to slow construction, but may anger allies and developing nations alike.

TO GO WITH AFP STORY BY MATHILDE RICHTER A power plant run by coal from the brown coal open cast mine Garzweiler is pictured on August 5, 2013 in Immigrath, western Germany. The small town Immerath and surrounding towns will be wiped off the map to allow energy giant RWE enlarge the huge open pit mine Garzweiler. 
AFP/Getty Images
Coral Davenport
See more stories about...
Coral Davenport
Oct. 31, 2013, 5 p.m.

On Tues­day af­ter­noon, thou­sands of mine work­ers from Ken­tucky and West Vir­gin­ia ral­lied out­side the Cap­it­ol, with signs protest­ing what crit­ics call Pres­id­ent Obama’s war on coal. Just down Pennsylvania Av­en­ue, in a large, richly ap­poin­ted of­fice on the second floor of the Treas­ury De­part­ment, Lael Brainard, Treas­ury’s un­der­sec­ret­ary for in­ter­na­tion­al af­fairs, briefed re­port­ers on plans for end­ing U.S. sup­port for pub­lic fin­an­cing of coal-fired power plants around the globe — es­sen­tially tak­ing Obama’s fight against coal pol­lu­tion from Wash­ing­ton to the world.

The move is the latest in a series of ag­gress­ive ex­ec­ut­ive-branch ac­tions the pres­id­ent is push­ing as he seeks to fight cli­mate change without help from Con­gress. While the ad­min­is­tra­tion chafes at the charge that it’s wa­ging a war on coal, the fact is that coal-fired power plants are the biggest con­trib­ut­or to glob­al warm­ing, and any ef­fect­ive cli­mate policy will ne­ces­sar­ily tar­get that en­ergy source. In Septem­ber, the En­vir­on­ment­al Pro­tec­tion Agency is­sued a draft reg­u­la­tion that would re­quire new U.S. coal plants to emit just half the car­bon pol­lu­tion of ex­ist­ing plants. The rule is ex­pec­ted to freeze con­struc­tion of do­mest­ic coal-burn­ing fa­cil­it­ies.

When it comes to such plants abroad, the U.S. alone can’t freeze pub­lic fin­an­cing. But it can wield sig­ni­fic­ant lever­age as a seni­or vot­ing board mem­ber on pro­jects fin­anced by the World Bank, the Asi­an De­vel­op­ment Bank, the Inter-Amer­ic­an De­vel­op­ment Bank, and the Afric­an De­vel­op­ment Bank. And Treas­ury of­fi­cials have already star­ted reach­ing out to en­sure that oth­er coun­tries, par­tic­u­larly in Europe, will join the U.S. in those votes, block­ing the pub­lic funds. “What we’re try­ing to do is to use the lever­age as­so­ci­ated with pub­lic fin­ance to help de­vel­op­ing coun­tries move in the dir­ec­tion of clean­er en­ergy,” Brainard said.

The idea is that if these mul­ti­lat­er­al in­sti­tu­tions con­sist­ently veto funds for coal plants around the world, it will cre­ate a ripple ef­fect, ul­ti­mately dis­suad­ing private in­vestors from coal as well. “If you have U.S. money go­ing in­to a pro­ject, it gives a stamp of ap­prov­al. And it sends a strong sig­nal that if the U.S. checks out of a par­tic­u­lar pro­ject, it’s not a good idea,” said Athena Balles­ter­os, dir­ect­or of sus­tain­able fin­ance pro­grams for the World Re­sources In­sti­tute, a think tank that works closely with the Obama ad­min­is­tra­tion on cli­mate-change policy.

About 1,200 coal-fired plants are now be­ing pro­posed glob­ally, ac­cord­ing to the in­sti­tute’s es­tim­ates. Those pro­jects are spread across 59 coun­tries, with the vast ma­jor­ity — 76 per­cent — in China and In­dia. Coal-burn­ing plants have been pro­posed in 10 de­vel­op­ing coun­tries, in­clud­ing Cam­bod­ia, Guatem­ala, Oman, Seneg­al, and Uzbek­istan.

Ex­perts es­tim­ate that only 10 per­cent of those plants are be­ing built with pub­lic fin­an­cing. So even if the United States suc­ceeds in get­ting the glob­al fin­an­cial in­sti­tu­tions to block the coal fund­ing, the im­me­di­ate ef­fect won’t be enough to trans­form the world’s en­ergy mix.

Then there’s ques­tion of whom the Treas­ury policy hurts. The U.S. coal in­dustry raged against it, nat­ur­ally. The sec­tor is already suf­fer­ing, thanks to the new EPA rules and a shift in mar­ket forces. A glut of cheap nat­ur­al gas, a fuel source with just half as much car­bon pol­lu­tion, has left coal com­pan­ies hop­ing that ex­ports would be their life­line. “It will re­strict the mar­ket for U.S. coal and for min­ing ma­chinery,” com­plained Luke Pop­ovich, a spokes­man for the Na­tion­al Min­ing As­so­ci­ation, adding that the rules could hurt Amer­ic­an com­pan­ies such as Cater­pil­lar, which ex­ports coal-min­ing equip­ment. The move will prob­ably also pro­voke un­happy push­back from the world’s oth­er top coal ex­port­ers — Aus­tralia, In­done­sia, Rus­sia, and South Africa.

But while the policy could hurt the world’s richest coal com­pan­ies, it may also af­fect the world’s poorest pop­u­la­tions. About 1.2 bil­lion people live without ac­cess to elec­tri­city, and in many of the de­vel­op­ing na­tions where they live, the like­li­est pro­spect for ac­cess to power is cheap coal, which has tra­di­tion­ally been fun­ded with a help­ing hand from fin­an­cial in­sti­tu­tions such as the World Bank.

Gov­ern­ments of de­vel­op­ing na­tions that des­per­ately need cheap elec­tri­city are likely to re­spond an­grily to the moves. In 2011, after the U.S. is­sued earli­er, and milder, guidelines aimed at cut­ting glob­al fin­an­cial sup­port for new coal plants, a group of de­vel­op­ing na­tions, in­clud­ing Brazil and China, wrote to the World Bank lam­bast­ing the pro­pos­al.

This time around, Treas­ury of­fi­cials have launched what one per­son close to the pro­cess de­scribed as a “mega-out­reach” ef­fort aimed at as­sur­ing poor, en­ergy-starved na­tions that the in­tent is not to block their ac­cess to en­ergy, but rather to en­sure that the money tˆhat would have gone for coal power will in­stead be re­dir­ec­ted to re­new­able en­ergy, such as wind and sol­ar.

One in­ter­na­tion­al en­ergy ex­pert is du­bi­ous that this ar­gu­ment will fly. “It’s un­der­stand­able that we don’t want to use gov­ern­ment money for high-car­bon sources, in the hopes that it will steer gov­ern­ments to low-car­bon sources. But for the South Africas and In­di­as that have cheap coal, but don’t have ac­cess to cheap nat­ur­al gas … it’s not a very ef­fect­ive strategy as re­gards en­ergy poverty,” said Dav­id Gold­wyn, an en­ergy con­sult­ant and a former seni­or en­ergy of­fi­cial in Obama’s State De­part­ment.

Gold­wyn spec­u­lates that al­though the new policy doesn’t spe­cific­ally men­tion nat­ur­al gas, many poor coun­tries will do the same as U.S. com­pan­ies are do­ing, and turn to that fuel, rather than re­new­ables, to gen­er­ate their elec­tri­city. As it hap­pens, the State De­part­ment has re­cently launched a push to boost nat­ur­al-gas ex­ports and pro­mote U.S. nat­ur­al-gas-pro­du­cing com­pan­ies abroad. Which means that Amer­ic­an en­ergy com­pan­ies could stand to be­ne­fit from the new policy — even if that was nev­er the in­tent. P

What We're Following See More »
STAFF PICKS
When It Comes to Mining Asteroids, Technology Is Only the First Problem
14 hours ago
WHY WE CARE

Foreign Policy takes a look at the future of mining the estimated "100,000 near-Earth objects—including asteroids and comets—in the neighborhood of our planet. Some of these NEOs, as they’re called, are small. Others are substantial and potentially packed full of water and various important minerals, such as nickel, cobalt, and iron. One day, advocates believe, those objects will be tapped by variations on the equipment used in the coal mines of Kentucky or in the diamond mines of Africa. And for immense gain: According to industry experts, the contents of a single asteroid could be worth trillions of dollars." But the technology to get us there is only the first step. Experts say "a multinational body might emerge" to manage rights to NEOs, as well as a body of law, including an international court.

Source:
STAFF PICKS
Obama Reflects on His Economic Record
15 hours ago
WHY WE CARE

Not to be outdone by Jeffrey Goldberg's recent piece in The Atlantic about President Obama's foreign policy, the New York Times Magazine checks in with a longread on the president's economic legacy. In it, Obama is cognizant that the economic reality--73 straight months of growth--isn't matched by public perceptions. Some of that, he says, is due to a constant drumbeat from the right that "that denies any progress." But he also accepts some blame himself. “I mean, the truth of the matter is that if we had been able to more effectively communicate all the steps we had taken to the swing voter,” he said, “then we might have maintained a majority in the House or the Senate.”

Source:
STAFF PICKS
Reagan Families, Allies Lash Out at Will Ferrell
16 hours ago
WHY WE CARE

Ronald Reagan's children and political allies took to the media and Twitter this week to chide funnyman Will Ferrell for his plans to play a dementia-addled Reagan in his second term in a new comedy entitled Reagan. In an open letter, Reagan's daughter Patti Davis tells Ferrell, who's also a producer on the movie, “Perhaps for your comedy you would like to visit some dementia facilities. I have—I didn’t find anything comedic there, and my hope would be that if you’re a decent human being, you wouldn’t either.” Michael Reagan, the president's son, tweeted, "What an Outrag....Alzheimers is not joke...It kills..You should be ashamed all of you." And former Rep. Joe Walsh called it an example of "Hollywood taking a shot at conservatives again."

Source:
PEAK CONFIDENCE
Clinton No Longer Running Primary Ads
19 hours ago
WHY WE CARE

In a sign that she’s ready to put a longer-than-ex­pec­ted primary battle be­hind her, former Sec­ret­ary of State Hil­lary Clin­ton (D) is no longer go­ing on the air in up­com­ing primary states. “Team Clin­ton hasn’t spent a single cent in … Cali­for­nia, In­di­ana, Ken­tucky, Ore­gon and West Vir­gin­ia, while” Sen. Bernie Sanders’ (I-VT) “cam­paign has spent a little more than $1 mil­lion in those same states.” Meanwhile, Sen. Jeff Merkley (D-OR), Sanders’ "lone back­er in the Sen­ate, said the can­did­ate should end his pres­id­en­tial cam­paign if he’s los­ing to Hil­lary Clin­ton after the primary sea­son con­cludes in June, break­ing sharply with the can­did­ate who is vow­ing to take his in­sur­gent bid to the party con­ven­tion in Phil­adelphia.”

Source:
CITIZENS UNITED PT. 2?
Movie Based on ‘Clinton Cash’ to Debut at Cannes
20 hours ago
WHY WE CARE

The team behind the bestselling "Clinton Cash"—author Peter Schweizer and Breitbart's Stephen Bannon—is turning the book into a movie that will have its U.S. premiere just before the Democratic National Convention this summer. The film will get its global debut "next month in Cannes, France, during the Cannes Film Festival. (The movie is not a part of the festival, but will be shown at a screening arranged for distributors)." Bloomberg has a trailer up, pointing out that it's "less Ken Burns than Jerry Bruckheimer, featuring blood-drenched money, radical madrassas, and ominous footage of the Clintons."

Source:
×