U.S. Treasury Opposes Development Bank Financing for Most Fossil Fuel Projects

Under its new energy financing guidance to multilateral development banks issued on August 16, the U.S. Treasury Department underlined the strong United States opposition to their involvement in financing of fossil fuel projects.

The decision was taken after a statement of Treasury Secretary Janet Yellen last July when she asked to rapidly align multilateral development banks portfolios with the 2015 Paris Agreement and develop ambitious plans to mobilize private capital to fight climate change. The Treasury is the largest shareholder in major development banks including the World Bank Group and the African Development Bank.

Its new energy guidance prioritizes financing for renewable energy. Coal energy projects across the entire coal value chain from mining, transport to power generation are absolutely not welcomed. But the US will indorse multilateral development banks to support early coal decommissioning projects.

Treasury also demonstrated its opposition to natural gas projects, such as exploration, except for some downstream natural gas facilities in least developed countries.