Among the many foreign policy blunders for which President Barack Obama will be remembered, few will arguably have as lasting a negative impact on U.S commercial interests and our position of moral leadership in the world as the pressure the president applied to the World Bank to cease funding coal-fired power plant projects in developing countries.
According to World Bank Executive Director Whitney Debevoise, “The Obama Administration believes that the Multilateral Development Banks (MDBs) have a potentially critical role to play in the future international framework for climate finance, and, in particular, to assist developing countries in mitigating greenhouse gas emissions and… build demand for no or low carbon resources.”
The World Bank’s decision to follow the Obama administration’s lead had an immediate, dramatic effect in Pakistan, shutting down construction of the Thar Coal and Energy Project, which depended on World Bank financing.
Dramatic effects often result in dramatic responses.
The world is rejecting the U.S.-led World Bank’s decision to defund fossil fuel energy development. Countries and international agencies are creating new development mechanisms outside of and competing with U.S.-controlled financial institutions. If they are successful, millions of people will be brought out of poverty, despite a diminished U.S. role.
China stepped in to replace the World Bank’s withdrawn financing for coal-fired power plants in Pakistan, agreeing to provide up to $37 billion in investment to generate 16,400 MW of power.
In a more profound and permanent move, China is leading the development of a new financing institution to counter the World Bank’s leverage. The Asia Infrastructure Investment Bank will get $50 billion in initial capital from China to invest in roads, cellphone towers, railways, airports, power plants, and other infrastructure projects across Asia.
Embarrassingly, despite the desperate, obvious need people in developing countries have for energy to reduce the grinding poverty crushing them, the Obama administration fiercely lobbied U.S. allies not to join the new bank.
In yet another show of our fading influence in world affairs under the Obama administration, most major U.S. allies and funding partners — including Australia, Britain, and South Korea — have agreed to join the Chinese-led effort.
An April 15 New York Times article described the new Asian infrastructure bank as serving a need not being filled by Western-controlled financing institutions: energy development. As the author, Eduardo Porter, put it, “If billions of impoverished humans are not offered a shot at genuine development, the environment will not be saved. And that requires not just help in financing low-carbon energy sources, but also a lot of new energy, period. Offering a solar panel for every thatched roof is not going to cut it.”
UN-related energy organizations are likewise breaking with the World Bank by continuing to fund coal-fired power plants in developing countries. The UN’s green climate fund (GCF) refused at a March meeting in Songdo, South Korea to implement an explicit ban on fossil fuel projects.
GCF reasoned developing countries should and would use coal as a primary source of electricity generation to drive industrialization. Therefore, GCF would provide funding to ensure the coal-fired power plants to be built are the most advanced, cleanest, coal plants available. Otherwise, GCF feared, poor nations would adopt
the cheapest, likely dirtiest, coal technologies available.
China, Japan, and Saudi Arabia favored GCF’s position. Takako Ito, a spokeswoman for Japan’s foreign ministry, told the Associated Press, “Japan is of the view that the promotion of high-efficiency coal-fired power plants is one of the realistic, pragmatic and effective approaches to cope with the issue of climate change.”
Japan backed its words with more than $1.6 billion in loans for coal plants in Bangladesh, India, and Indonesia.
The International Energy Agency Clean Coal Center (CCC) also welcomed the UN’s decision to fund coal power in developing countries. Dr. Andrew Minchener of CCC told Power Engineering International (March 30), “I am very pleased to see a further rejection of the World Bank and others’ blanket ban on support for clean coal technology. Theprovision of financial support for high-efficiency low emissions coal-fired power plants is an effective means to reduce the overall carbon intensity of the world’s coal power fleet, while also helping many people in developing countries to escape poverty.”
There you have it: An administration driven by climate alarmism hurts the poor all over the world, burns diplomatic bridges, and forgoes commercial opportunities in a vain effort to impose its carbon-free vision on the world.
Such stubborn insistence on a failed policy is both foolish and immoral.
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