By ACCF, Special for USDR.
Climate change mitigation concerns have largely defined the Obama Administration’s policy on international coal plant financing. These restrictions are limiting much-needed funds for providing access to affordable and reliable energy in developing countries, according to a new special report by the American Council for Capital Formation Center for Policy Research (ACCF CPR).
In U.S. Coal Plant Financing Policy: A Threat To Long-Term U.S. Interests In The Developing World, ACCF Executive Vice President George David Banks notes that China and other international competitors – using less efficient, higher emitting coal technologies – are stepping up to fill the gap left behind by the United States and others to fund power generation in developing nations.
“The developing world is seeking financial assistance from the United States and other developed economies to provide basic electricity access, which is indispensable to economic growth and improvements in environmental quality and health care,” Banks said. “Unfortunately, U.S. economic development policy is largely shaped by climate goals instead of poverty eradication. Because of this position, poor countries increasingly view the United States as being insensitive to their needs and far removed from reality.”
Over 1.3 billion people remain without electricity (about 20 percent of the global population) —the majority of which are located in Sub-Saharan Africa and developing Asia, particularly in rural areas. To address this issue by 2030, the IEA and OECD have determined that roughly $1 trillion is required for investments in on-grid, mini-grid and off-grid solutions. Of the on-grid power generation, the IEA and OECD estimate that over 60 percent would be delivered using fossil fuels, predominantly coal.
The United States, however, is pushing stringent conditions that would limit public financing of coal plants to when there are no other economically feasible alternatives or for facilities deploying carbon capture and storage (CCS), which is not even commercially available.
“As a nation, we should take a more practical approach to coal plant financing in the developing world and use an efficiency-based standard for emissions control,” Banks said. “It’s in our interest to deploy affordable and reliable generation that can attract investment in manufacturing and create jobs. Economic growth is essential to political stability in poor countries.”
Simultaneous with the release of the ACCF study, House Appropriations Committee Chairman Hal Rogers (R-KY) and more than two-dozen U.S. House members issued a letter to President Obama outlining their concerns over the long-term implications of federal policies toward coal financing and urging the White House to reverse its position.
“As the United States and other global leaders have demonstrated, access to affordable and reliable energy is critical to the development and health of a nation’s economy. Coal-fired power has demonstrated a proven capability to meet both residential and industrial energy demands while expanding access to healthcare, utilities and infrastructure in developing nations. Any efforts to prevent such countries from utilizing the full range of energy sources needed to reach their goals would deny them a critical opportunity that has benefitted so many leading nations throughout history,” Rogers and the members stated.