On Aug.16, the U.S. Department of the Treasury announced a new fossil fuel energy guidance for multilateral development banks, which aims to extend the Davos edict against financing for coal — and ultimately any “fossil fuel” — beyond private capital to include government institutions. This is the next step following the declaration made by G7 countries in June, which American President Joe Biden then incorporated in his Build Back Better plan, and later codified in Executive Order 14008, which puts climate change at the forefront of U.S. foreign policy.
In a posting on the Center for Strategic and International Studies site on Aug. 19, CSIS Senior Fellow for the Economics Program Stephanie Segal provides a detailed analysis: “Specifically, the United States will oppose all new coal-based and oil-based energy projects, with rare exceptions for the latter, for example in humanitarian crises or as backup generation for clean off-grid energy systems. Treasury will also oppose ‘upstream’ (exploration) natural gas projects and will support ‘midstream and downstream’ natural gas projects only if certain criteria are met....”
While the Treasury statement is technically a “guidance” and not a “mandate,” Segal makes it clear that is is likely to carry the weight of a Caesarean edict, because of U.S. prominence as a “stakeholder” in many of these institutions: “The United States is the largest shareholder at the Inter-American Development Bank (IADB, 30.0%), World Bank (15.8%), and European Bank for Reconstruction and Development (EBRD, 10.1%).” In addition, it “holds the largest voting share, along with Japan, at the Asian Development Bank (AsDB, 15.6% each) and the second largest share behind Nigeria at the African Development Bank (AfDB, 7.6%).”
The Treasury action, Segal observes, will leave the world’s two primary remaining multilateral development banks — the Asian Infrastructure Investment Bank and (BRICS) New Development Bank — along with “unilateral” lenders like Export-Import Bank of China and the China Development Bank, totally isolated as lending institutions, making it much riskier for them to make any such loans.
