Phillip Bump at The Atlantic Wire summed up yesterday's climate speech by the president nicely: "Less Coal, Finally." From throwing his weight behind carbon pollution standards for new and existing coal plants to a ban on overseas coal plant investments, it's clear the president sees no place for dirty fuels in a 21st century clean energy economy. But of all the policies outlined in the President's plan, the international proposals surprised people the most. Here's why they are so important.
In his big climate speech on Tuesday, the President said "Today, I'm calling for an end of public financing for new coal plants overseas." The institution most impacted by the overseas coal ban is the U.S. Export-Import (Ex-Im) Bank. As I wrote Monday, President Obama needed to tell the Ex-Im Bank to move beyond coal because it is careening wildly out of control when it comes to fossil fuel finance, particularly compared with its sister organization, the Overseas Private Investment Corporation (OPIC) who hasn't financed a coal plant in a decade. Not only has Ex-Im been on a spree, but the projects it is considering now are simply embarrassing (coal exports in the Great Barrier Reef anyone?). Putting an end to this finance is a big deal.
But achieving it is no small task. It will take real leadership to bring the Ex-Im Bank into a place that will have real impact. The institution now needs to reject two large coal plants in Vietnam it had in its pipeline prior to the announcement. That decision will be critical to the validation of the policy as the Ex-Im Bank has a sordid history of implementing its existing low carbon policy. With the President's climate credibility on the line, Ex-Im President Fred Hochberg has no choice but to close the door on coal at this institution for good. When he does, the single largest spigot for US tax payer dollars for overseas coal projects will dry up.
The best part is that this signal will reverberate throughout the international financial institution world. Both the World Bank and the European Bank for Reconstruction and Development are in the process of revising their energy policies. It's clear that curbs on coal lending will be front and center for both. Of the two, the World Bank's is particularly important as it helps set policy at scores of other financial institutions. How World Bank President Dr. Kim deals with deadly new coal plants like the one in Kosovo will define his climate legacy, just as it is defining Obama's.
As you can see, Obama's leadership on international coal finance extends far beyond the agencies directly under his purview. His signal, that this deadly source of energy is simply not deserving of public financing support, is incredibly important. So for all those project developers seeking cheap cash to develop destructive new coal projects our President has a message: The USA is closed for business.