The FY2015 State Foreign Operations spending bill that emerged from the House on Tuesday demonstrates a clear misunderstanding of the role of international institutions in promoting U.S. interests and reflects the inconsistent priorities and hypocrisy of House Republicans. The bill cuts funding for the UN Human Rights Council and other worthy institutions, while simultaneously boosting spending to build coal-fired power plants overseas. Although trade-offs must be made when budgets are tight, steering money away from international institutions that promote human rights and toward an industry that is not only responsible for thousands of deaths and illnesses per year, but is also increasingly obsolete and economically unsustainable, is outrageous.
The bill includes a provision that would deny funding to certain development finance institutions such as the World Bank and OPIC for the enforcement of limits on coal-fired power generation. In the case of the World Bank, such limits are largely self-imposed. Last year the World Bank Group agreed on its new Energy Directions Paper for the Bank's work in the energy sector. One of the aims of this paper was to shift the institution's portfolio away from investing in coal towards more renewable energy projects. It did so by limiting coal projects to "rare circumstances." Arguably, the vague restriction would still allow even controversial coal plants to go forward, given the discretion the Bank has to decide the meaning of "rare circumstances." Yet, it was a step in the right direction for an institution that has long been a major source of funding for environmentally degrading power projects. House Republicans, however, seem to believe that even this is a step too far.
The press statement released along with the draft bill stated:
The Committee bill overrides the anti-coal regulations of the Overseas Private Investment Corporation, Export-Import Bank, and World Bank, and allows the financing of coal-fired and other power generation projects by U.S. companies overseas. This provision will bolster U.S. job creation and ensure quality, cost-effective technology for developing and other nations.
Whether or not U.S. job creation was a motivating factor here, it is completely contrary to the stated purpose of the Bank, which is to end extreme poverty and promote shared prosperity.
The reference to "quality, cost-effective technology for developing and other nations" in the statement is laughable. Coal-fired power generation cannot seriously be considered a "quality" source of energy, or even "cost-effective," once the externalities associated with burning coal are factored in. The high economic costs associated with poor health and environmental degradation (such as lost livelihoods, degradation of natural capital, etc.) cannot be considered consistent with the World Bank's mission. Furthermore, it is well-known that building coal-fired power plants to provide energy access in places like rural Africa, where there is no centralized power grid, is completely ineffective. Instead, off-grid and mini grid renewable sources of energy can provide power where there currently is none. Nevertheless, this bill would encourage more spending on coal and less on effective, sustainable energy projects that might finally lead to energy access for all and that undoubtedly would contribute to reduced poverty.
House Republicans apparently believe that to effectively oppose regulations that restrict burning fossil fuels, they must defend the use of those fuels under any circumstances. The Bank is not a private corporation, and the limits set in its Directions paper are self-imposed. Market forces, including the rapid rise of natural gas, have largely contributed to the decline of the coal industry. Coupled with alarming new research on climate change, and the fact that burning coal is associated with death and illness everywhere, these indications should lead policymakers away from doubling down on coal. However, this move does exactly the opposite--the bill uses U.S. taxpayer dollars to choose winners (large coal companies) and losers (renewable energy entrepreneurs, people living in proximity to coal plants, the climate...).
The limit on coal lending at the World Bank came after decades of advocacy by environmental and human rights groups to shed light on the damaging impacts coal-fired power plants have on our climate and our health. The U.S. Congress wields tremendous influence at the World Bank and other international financial institutions, and a message like this seriously undermines the efforts of the international community to cut carbon pollution and finally put development finance institutions on the path towards sustainable energy access for all.
As long as Congress commits U.S. taxpayer dollars to the World Bank, it should fight to ensure those funds are not used to finance projects that drive climate change or harm human health, but rather to fulfill the mission of the organization that Americans have been leading since its inception. It is in our national interest to contribute to global poverty reduction and to be seen as a leader in encouraging the development of cleaner, sustainable energy.
Co-authored with Jolie Schwarz, Legislative Affairs Fellow at Bank Information Center