Treasury guidance fails to end U.S. support for fossil fuel spending overseas
WASHINGTON, D.C.— Today, the U.S. Treasury Department released guidance outlining the U.S. government’s voting position on fossil fuel projects at multilateral development banks (MDBs) in which it participates, like the World Bank Group (WBG).
The guidance includes restrictions on US support for coal, oil and gas financing at MDBs, including through policy-based operations and financial intermediaries, with notable exceptions.
Luisa Galvao, International Policy Campaigner at Friends of the Earth U.S., issued the following statement in response:
While the guidance introduces novel, broad-based restrictions on US support for fossil fuel projects at the MDBs, it pays a lot of lip service, but has little teeth. The Treasury guidance leaves loopholes for continued fossil fuel financing that are so big, you can drive an LNG ship through them.
Continued support for fossil fuel expansion in developing countries will subject the world’s most vulnerable communities to displacement, illness, and livelihood loss, and developing economies to the risks and injustice of a delayed transition to clean energy.
A full analysis of the announcement can be found here.
This announcement follows President Biden’s Executive Order on Tackling the Climate Crisis at Home and Abroad, calling on Treasury to “develop a strategy for how the voice and vote of the United States can be used in international financial institutions, including the World Bank Group and the International Monetary Fund, to promote financing programs, economic stimulus packages, and debt relief initiatives that are aligned with and support the goals of the Paris Agreement.” The U.S. is the largest shareholder in several international financial institutions, including the World Bank Group, giving it significant influence on decision-making and voting power at their respective Boards of Directors.
In 2013, the U.S. had issued guidance ending U.S. support for financing of new coal plants overseas through MDBs, with rare exceptions. At the time, this made the U.S. a global leader, and contributed to a domino effect. However, this guidance was reversed under the Trump Administration. In 2019, the U.K. announced that it would end taxpayer support for fossil fuel projects overseas as soon as possible, including U.K. positions in international financial institutions.
Earlier this year, Friends of the Earth U.S. joined nearly 450 organizations calling on the Biden Administration to immediately end all U.S. public financing for fossil fuels, including through the international financial institutions in which the U.S. participates. In June, Friends of the Earth U.S. and the Sierra Club convened the Global Grassroots Leaders Summit, which brought together grassroots leaders from 30 organizations in 17 countries to discuss the impacts of U.S.-financed energy projects and elevate asks to the US Administration to stop financing fossil fuel projects overseas.