The Biden administration is weighing a last-ditch attempt to reach an international agreement that would restrict financial support for foreign oil and gas projects before critical negotiations begin in Paris.
Reaching the deal is seen as essential to fulfilling a promise President Joe Biden made in his first year in the White House. But administration officials were still deciding on a final negotiating stance over the weekend, according to people familiar with the matter.
This just before Monday’s talks between members of the Organization for Economic Co-operation and Development. The deliberations were described by people familiar with the matter who asked not to be identified because they are private.
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At issue is a proposal by European nations to expand an existing three-year ban on export credit agency support for unmitigated coal power plants.
Under the proposal put forward by the European Union, financing from export credit agencies, such as loans and guarantees, would be off limits for most oil and gas projects.
Disagreements between US officials and the US Export-Import Bank over the best approach have already effectively stalled action on the issue at the OECD for nearly a year.
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A key consideration has been how the new restrictions would affect the bank, an independent agency whose charter prohibits denying financing against any particular industry, sector or business, the people said.
The bank is ready for congressional reauthorization in 2026.
Representatives from the White House and the U.S. Treasury Department did not immediately respond to requests for comment Saturday outside normal business hours.
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Restrict fossil fuels
Restricting funding for fossil fuels is seen as an important way to stem the flow of support for oil and gas projects, a year after the U.S. and nearly 200 other countries rallied behind a pledge to abandon such projects.
Under Biden, the US has repeatedly promised to make this financial change. Seven days into his presidency, Biden directed U.S. agencies to work with the Ex-Im bank and other institutions to seek ways to “promote an end to international financing of carbon-intensive fossil fuel-based energy.”
Three months later, the US Treasury Department said it would work with OECD countries and other US agencies “to reorient financing away from carbon-intensive activities.”
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And in December 2021, the US signed an international declaration committing to “end new direct public support for the international fossil fuel energy sector” except in very limited circumstances.
COP29
Sen. Ed Markey, a Democrat from Massachusetts, said it’s time for the Biden administration to make good on those promises. Biden has had four years, he said on the sidelines of the COP29 climate summit in Baku, Azerbaijan. “He should finish this.”
The administration is rushing to distribute spending under the Reducing Inflation Act and secure more of Biden’s climate legacy before Donald Trump’s inauguration in January, but some of these actions remain deeply vulnerable to a presidential shift starting in 2025.
However, an OECD commitment would be different—adopted by an international body and seen as immune to opposition from the incoming administration.
The OECD represents the governments of 37 democracies with market-based economies, setting policy standards designed to promote sustainable economic growth.
Markey said he was calling on the Biden administration to “fulfill its commitment to the Glasgow declarations to end public financing for unreduced fossil fuels abroad and support a strong OECD outcome that aligns with the goals.”
In these final weeks of the Biden presidency, “they must do all the right things,” Markey said, noting that Biden has a chance to “look as good historically as the climate president” in realizing his “far-sighted, long-term” vision. for finances from 2021.
Supporters pushing the administration to act are emphasizing the time left in Biden’s presidency — as well as Trump’s pledge to unlock U.S. oil and gas production and his threat to back out of the Paris climate accord.
“If the U.S. moves forward, it would be more significant than anything they do at the COP and more Trump-proof,” said Kate DeAngelis, manager of the environmental group’s international finance program. Friends of the Earth. “This will divert billions of dollars away from fossil fuels.”
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