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US sets strict limits on coal funding abroad

World Coal,

The US plans to use its leverage within global development banks to limit financing for coal-fired plants abroad, as part of the government’s international strategy to combat climate change.

The US Treasury said it would only support funding for coal plants in the world’s poorest countries if there is no other efficient or economical alternative for their energy needs.

For richer countries, the US will only support coal plants that incorporate carbon capture and sequestration, an advanced technology for reducing emissions. This technology however is not yet commercially viable, so essentially the US would limit coal funding to the world’s poorest.

The new limits affect US support for new coal-fired power plants funded by multilateral development banks such as the World Bank.

“As developing economies embark on a journey towards a clean energy future, today’s announcement marks an important step in helping them reach this goal,” US Treasury Undersecretary for international affairs, Lael Brainard, said in a statement on Tuesday.

President Obama announced in June that the US would stop investing in most coal projects overseas, as part of a larger strategy of climate measures, and called on multilateral banks to do the same.

In July, the World Bank agreed to a new energy strategy that will limit financing of coal-fired power plants to rare circumstances in countries that have no alternatives to coal.

Although other donors and the private sector will still continue to finance coal, some analysts hope the strict limits on public funding could send a message that coal is a risk investment, prompting countries to turn to alternative energy sources.

The Treasury Department said that the US would work with other countries to institute similar policies. On a visit to Stockholm last month, Obama agreed with the leaders of Denmark, Finland, Iceland, Norway and Sweden that none of the countries would fund coal projects.

Edited from various sources by Katie Woodward

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