STATEMENT: BTI’s Vijaya Ramachandran Response to Biden Administration’s New Guidance on Fossil Fuel Energy Investment in Developing Economies

Berkeley, Calif. — Today, the Breakthrough Institute’s Director for Energy and Development Vijaya Ramachandran issued the following statement on the Biden Administration’s guidance on fossil fuel energy projects undertaken by the multilateral development banks, which provide financing for economic development projects in low and middle-income countries. The United States is a shareholder in five MDBs: World Bank, African Development Bank (AfDB), Asian Development Bank (AsDB), European Bank for Reconstruction and Development (EBRD), and Inter-American Development Bank (IDB).

The guidance says that the United States opposes coal and oil-based energy projects but does support midstream and downstream natural gas projects if they meet four criteria:

  • The projects must be in IDA-eligible countries, which are poor countries, with an income of less than $1205 per capita.
  • There are no economically and technically feasible clean energy alternatives.
  • The project has a significant impact on energy security, energy access, or development.
  • The project is aligned with the goals of the Paris Agreement.

The document also states that the United States is open to supporting carbon capture, use, and storage, and methane abatement projects, as well as the use of natural gas and oil products for household heating and cooking.

Ramachandran says:

“The guidance on fossil fuel investments reinforces the Biden Administration’s commitment to addressing climate change while also recognizing the need for economic growth in poor countries. It balances the need for a cheap and reliable supply of energy in poor countries with the need to reduce carbon emissions worldwide. It does so by clearly defining the types of energy projects that will be supported by the United States. I commend the Administration for its thoughtful and nuanced approach.”

“In particular, the support for natural gas is very welcome. Natural gas is a fossil fuel but it is roughly twice as carbon-efficient as coal, and is abundant in many poor countries including Nigeria, Mozambique, Angola and the Democratic Republic of the Congo. Natural gas is a critical input in modern systems of agriculture and transport. Natural gas is the best available feedstock for producing synthetic fertilizer; it can power cars, buses, trucks and ships, and cold-storage systems for food and medicines. It is reliable and easy to store. I also welcome the support of natural gas for clean cooking projects as a substitute for biomass which is hazardous to the health of poor people, and especially of women.”

Vijaya Ramachandran is the director for energy and development at The Breakthrough Institute. Twitter @vijramachandran. You read more of her work on this issue here:

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