U.S.Funding For Foreign Coal Plants Tied To Survival Of Ex-Im Bank

U.S. President Barack Obama thought he had put an end to the overseas financing of big coal-fired power plants, but American support for coal plants abroad could be making a comeback.

The pledge by Obama to end support for coal plants came in a landmark June 2013 speech, where he unveiled his “Climate Action Plan.” Along with other steps, including limits on greenhouse gases from domestic power plants, Obama promised to end financial support for the construction of coal plants overseas.

The U.S. has long supported coal plant construction through the Export-Import Bank (Ex-Im), an agency of the federal government that provides loans to foreign governments and companies to purchase American-made goods. Ex-Im usually provides credit for the purchase of major industrial goods, such as airplanes, farm equipment, and – until the White House unveiled its climate action plan – coal-fired power plants.

Several major international financial institutions followed Obama’s lead and ended financial support for coal projects, including the World Bank, the U.S. Trade and Development Agency, the European Investment Bank, and the European Bank for Reconstruction and Development (EBRD).

As these powerful banks pulled their support, prospects for coal’s growth around the world took an immediate hit. “We’ve never seen a cascading sentiment that coal is not acceptable like we’re seeing happen right now,” Justin Guay, the head of the Sierra Club’s international climate program, said in a Bloomberg News interview last year. “It’s a snowball running downhill.”

But U.S. financial support for coal overseas may not be dead yet. At issue is the renewal for the charter of the Ex-Im Bank, which will expire on September 30 if Congress does not vote to approve an extension.

A growing block of Tea Party conservatives are seeking to end the bank’s charter because they view its existence as a symbol of corporate welfare. The Heritage Foundation, which is leading the charge against the bank, argues that Ex-Im “is a conduit for corporate welfare beset by unreliable risk management, inefficiency, and cronyism. Terminating the bank’s charter should be an easy call for lawmakers.”