U.S. spending bill aims to dilute curbs on overseas coal financing

WASHINGTON Tue Jan 14, 2014 1:57pm EST

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WASHINGTON Jan 14 (Reuters) - Enforcement of a White House climate policy that aims to restrict financing for coal-fired electricity generation projects abroad will become more difficult under the new $1.1 trillion spending bill negotiated by Congress.

Lawmakers on Monday unveiled the bill, which would avert a government shutdown and boost funding levels slightly for military and some domestic programs, including the budget of the Environmental Protection Agency (EPA), over the December post-sequester budget agreement.

According to a summary by Republicans on the House Appropriations Committee, the spending package contains a provision to prohibit the Export-Import Bank and the Overseas Private Investment Corporation (OPIC) "from blocking coal and other power-generation projects, which will increase exports of U.S. goods or services."

The Export-Import Bank's (Ex-Im) board of directors in December voted to end its funding of coal power plants abroad, except for certain projects proposed for the world's least developed countries.

The Export-Import Bank offers government-backed loans or guarantees to exporters to stimulate U.S. investment overseas. OPIC, which offers investment services to help U.S. companies abroad, has not financed a coal plant in a decade.

President Barack Obama unveiled his climate strategy in June, calling on lending institutions to halt the financing of coal projects abroad. After that, the World Bank announced it would provide lending for coal projects to only the poorest countries.

The spending omnibus bill does not prohibit the ban of coal finance outright, but expands the list of the countries eligible for funding to include major coal users including India and Vietnam, among others, a spokesman for the Export-Import Bank said on Tuesday.

"The bill does not prevent us from enforcing the coal policy," Ex-Im spokesman Phil Cogan told Reuters. "It expands the list of poorest countries that are essentially exempted from a prohibition of financing."

"We are looking at the implications of the language. OPIC remains committed to supporting U.S. private sector investment for development projects in emerging markets," said Amanda Burke, an OPIC spokeswoman.

In July, the Ex-Im board of directors voted not to proceed with the financing of U.S. exports to help build a coal-fired power plant in Vietnam.

The Ex-Im Bank's fossil fuel financing reached a peak of $9.6 billion in the 2012 fiscal year, according to environmental group Pacific Environment.

The coal industry favors a reversal of the ban as it looks for new markets. U.S. coal demand is expected to diminish due to a crackdown by the U.S. Environmental Protection Agency on carbon pollution by the domestic electric generating sector.

Democratic aides said the spending bill includes no new provisions which would prohibit regulations on domestic greenhouse gas emissions, and none addressing forestry and stream management. (Reporting by Valerie Volcovici, editing by Ros Krasny and David Gregorio)

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