The Biden administration has suspended government support for overseas coal, oil, and natural gas projects.
A directive sent last week to embassies around the world informed American diplomats that U.S. policy "will center on promoting clean energy" and avoid financing for fossil projects in conjunction with President Joe Biden's overarching agenda to mitigate climate change, a State Department spokesperson confirmed Friday.
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"The United States released implementation guidance for official international energy engagements which steers U.S government investment toward clean energy projects that will power the future and maintain our foreign policy interests," the spokesperson said in a statement.
The policy guidance follows Biden's Jan. 27 climate change executive order instructing the secretaries of state, treasury, and energy to work with the Export-Import Bank and the U.S. Development Finance Corporation "to identify steps through which the United States can promote ending international financing of carbon-intensive fossil fuel-based energy while simultaneously advancing sustainable development and a green recovery."
The resulting guidance directs U.S. officials to avoid most projects supported by "carbon-intensive" fuels.
“Our international energy engagement will center on promoting clean energy, advancing innovative technologies, boosting U.S. clean-tech competitiveness and providing financing and technical assistance to support net-zero transitions around the world,” the document said, according to Bloomberg.
The policy makes exemptions for certain projects if it can be demonstrated that they support U.S. national security or foreign policy, but it is especially strict on coal projects, with support conditioned on the capture of a prospective project's greenhouse gas emissions.
“Engagements related to coal generation must be related to full abatement of emissions and/or accelerated phase out,” the guidance said.
It added that the government will not impede American oil and gas companies looking to expand in the global market.
“As long as there is demand for fossil energy products, technologies, and services in global markets, the U.S. government will not stand in the way of U.S. companies that are ready and able to meet those needs,” the document said. “The U.S. government will continue to help U.S. energy companies, especially small- and medium-sized businesses, achieve their commercial objectives without compromising global climate ambitions.”
Fred Hutchison, president and CEO of LNG Allies, called the guidance a finance policy "sea change" that the industry had been anticipating.
"It's not closing the door to gas but setting the bar a lot higher than it had been set in the previous administration," Hutchison said.
Environmental groups have emphasized the importance of eliminating public finance of fossil fuel projects as a means of bringing down greenhouse gas emissions. Collin Rees, U.S. program manager of Oil Change International, called the guidance a "major step forward to align our overseas spending with climate goals."
"The U.S. has spent over $11 billion in public money on overseas oil, gas, and coal projects since the Paris Agreement was signed — money that has been used to lock in more emissions, extract and burn more fossil fuels, and violate the rights of communities," Rees said in a statement.
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Before Friday, the Biden administration took another step toward ending U.S. government oil, coal, and gas financing in conjunction with the COP26 conference last month, where it was announced that the U.S. would join more than 20 nations and stop funding overseas fossil fuel projects by the end of 2022.