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By: Kevin L. Turner and Amy L. Edwards, HOLLAND & KNIGHT LLP
In this article, the authors discuss the five broad areas of focus of the International Climate Finance Plan that impact international private sector development.
IN THE BIDEN ADMINISTRATION’S EXECUTIVE ORDER 14008, “Tackling the Climate Crisis at Home and Abroad,” on January 27, 2021, President Joseph Biden called for a climate finance plan “making strategic use of multilateral and bilateral channels and institutions, to assist developing countries in implementing ambitious emissions reduction measures, protecting critical ecosystems, building resilience against the impacts of climate change, and promoting the flow of capital toward climate-aligned investments and away from high-carbon investments.”
Building on this commitment, the administration on April 22, 2021, released the U.S. International Climate Finance Plan (the International Climate Plan).1 The stated goal of the International Climate Plan is: “The United States intends to double, by 2024, our annual public climate finance to developing countries relative to the average level during the second half of the Obama-Biden Administration (FY 2013–2016). As part of this goal, the United States intends to triple our adaptation finance by 2024.”
The International Climate Plan has five broad areas of focus, as outlined below, and this article focuses on the key items that impact international, private sector development.
U.S. agencies will seek to end international investments in and support for carbon-intensive fossil fuel-based energy projects. However, in limited circumstances, there may be a compelling development or national security reason for U.S. support for a project to continue.
DFC will implement a net-zero emissions strategy to transition its portfolio to net-zero emissions by 2040, including by increasing investment in projects that capture and store carbon.
The Treasury Department, with partners in the Organization for Economic Cooperation and Development (OECD) and in close partnership with other U.S. government departments and agencies, will spearhead efforts to modify disciplines on official export financing provided by OECD export credit agencies (ECAs), to reorient financing away from carbon-intensive activities. It will also advocate to further incentivize ECA support for climate-aligned investments (e.g., broadening the scope of projects eligible for preferential terms), including in the area of adaptation and resilience, and to adopt methodologies to take climate risks into account when assessing risks to prospective loans and existing portfolio assets. Further, the Treasury Department will develop guidance on fossil fuel energy activities at multilateral development banks, which it will use as part of its criteria when casting U.S. votes on specific projects.
The Treasury Department, in coordination with other U.S. agencies, will:
In order to provide for more detailed reporting, tracking finance for vulnerable populations, and enhanced reporting on mobilization and impact, the Administration will:
Kevin L. Turner, a partner in the Washington, D.C., office of Holland & Knight LLP, focuses his practice on international financing transactions and is the former general counsel of the U.S. International Development Finance Corporation and the Export-Import Bank of the United States. He can be reached at firstname.lastname@example.org.
Amy L. Edwards, is a partner in Holland & Knight’s Public Policy & Regulation Group in Washington, D.C. She is co-chair of the firm’s National Environmental Team. She may be contacted at email@example.com.
This article was first published in the September 2021 issue of Pratt’s Energy Law Report. All rights reserved. Visit the website to subscribe: https://store.lexisnexis.com/categories/shop-by-jurisdiction/national-194/pratts-energy-law-report-skuusSku20750419.
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1. Source info https://www.whitehouse.gov/wp-content/uploads/2021/04/U.S.-International-Climate-Finance-Plan-4.22.21-Updated-Spacing.pdf 2. For more detailed, agency-specific information related to the International Climate Plan, see: