Biden Administration orders immediate stop in financing new carbon intensive fossil fuel projects overseas

According to US diplomatic cables, the Biden Administration has ordered U.S. government agencies to immediately stop financing new carbon-intensive fossil fuel projects abroad and prioritize global collaborations towards clean energy technology.

The move is aimed at ending US financial support for coal and other carbon-intensive energy projects overseas.

“The goal of the policy … is to ensure that the vast majority of U.S. international energy engagements promote clean energy, advance innovative technologies, boost U.S. 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,” reads the diplomatic cable.

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

The US policy bans U.S. government financing of overseas coal projects that do not capture or only partially capture carbon emissions, allowing federal agencies to engage on coal generation only if the project demonstrates full emissions capture or is part of an accelerated phaseout.

It however exempts carbon-intensive projects for two reasons that are deemed as necessity for national security, or for geostrategic reasons, or are crucial to deliver energy access to vulnerable areas.

At the recent U.N. climate talks in Scotland, the Biden Administration had pledged along with 40 countries and five financial institutions to end new international finance for fossil fuel projects by the end of 2022, except in limited cases.

“The administration has elevated climate change as a core tenet of its foreign policy,” said a State Department spokesperson.

The commitment made in Scotland “will  reorient tens of billions of dollars of public finance and trillions of private finance towards low-carbon priorities, ” said the spokesperson.

“This policy is full of exemptions and loopholes that lack clarity, and could render these restrictions on fossil fuel financing completely meaningless,” said Kate DeAngelis, a climate finance expert at Friends of the Earth.

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