The World Bank board of directors could today endorse a sweeping new energy policy that for the first time restricts financing for new coal plants in poor countries, bank officials confirmed.
Meanwhile, the U.S. Export-Import Bank will decide later this week whether to move forward with the proposed financing of a new coal plant in Vietnam, making it the first test of President Obama's vow to end American support for coal projects overseas.
Together, the moves bring to a boil long-simmering issues in global climate change politics. In an era in which scientists say the link between carbon emissions and the devastation brought about by rising global temperatures is incontrovertible, what right should poor countries have to seek aid to burn coal? Meanwhile, what responsibility do wealthy countries -- most of which have been burning coal for decades -- now have in deciding where to put limited public dollars for overseas energy development?
"Africa is still largely underdeveloped, and the barrier to Africa's development consists largely of its energy poverty. So we, too, as Africans, want to get to a state of development, and in getting to that state of development, we would not want to be the sole contributors to mitigating what we haven't caused. I think that is the tension," said South African Ambassador to the United States Ebrahim Rasool.
The World Bank informal discussion will center around a new energy "direction" that lays the groundwork for a new funding blueprint all but eliminating new coal projects from the institution's portfolio. A draft of the document leaked to ClimateWire last month calls for the bank to "cease providing financial support for greenfield power generation projects, except in rare circumstances where there are no feasible alternatives available to meet basic energy needs and other sources of financing are absent."
According to Justin Guay, who leads the Sierra Club's international climate program, that language was massaged at the behest of China. But Guay and two World Bank management officials yesterday said the changes are largely semantic and won't alter the fundamental restrictions on coal.
"Tomorrow's vote starts an inevitable process of closing the door for good on coal finance from international public sources," said Guay. He praised World Bank President Jim Kim for working with countries to find agreement on coal without compromising the heart of the proposed restrictions. The effort is a far cry from the last time World Bank management tried to push through somewhat similar changes, about two years ago, which were stymied by China and a coalition of developing nations.
Europe backs coal restrictions
"The fact they were able to get consensus on severely restricting coal finance to 'rare circumstances' is entirely a reflection of Dr. Kim's leadership," Guay said. "Two years ago, the strategy fell apart at the board level under [former President Robert] Zoellick. Fast forward to today, and the only difference is the fact that Dr. Kim has made addressing climate change his overarching priority."
The effort is still far from a done deal. An adviser to the World Bank's executive director from China Shaolin Yang said yesterday that developing countries still share concerns. The adviser declined to say whether the Chinese government would give the green light to the new restrictions, saying, "We are still waiting for instructions from the capital."
World Bank action comes less than a month after President Obama set in motion rules to limit greenhouse gas emissions from existing U.S. power plants and other measures to reduce the United States' contribution to climate change. At the same time, he called for ending U.S. support for overseas coal except in limited circumstances and urged other nations to do likewise.