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April 01, 2013

U.S. Treasury Insists That Coal Impacts Be Accounted For

CoalThe U.S. Government took an important step to protect local communities from deadly coal pollution by abstaining from a vote on a $900 million funding package for Rio Tinto's Oyu Tolgoi mine in Mongolia. The U.S. Government decision amounts to a vote of no confidence in the International Financial Corporation (IFC) financed project. More importantly it sets an important precedent for coal projects seeking support from the United States -- a welcome sign given its continued support for the Kosovo coal project.

While the U.S. government's support for Kosovo continues to be controversial, Treasury's decision on the Mongolian project was the right one to make, and the Sierra Club commends them for it. Included in the project is a 450-750 MW coal fired-power station that is in clear violation of the Bank's own coal guidance, but which the IFC failed to consider by labeling it an associated facility. When explaining the decision, Treasury officials stated, "The ESIA does not provide a sufficiently detailed analysis of associated facilities and cumulative impacts, notably concerning a coal-fired power plant that will likely be needed to provide reliable power for the project."

The Oyu Tolgoi project has been a boondoggle from the start with, not one, but two open investigations by the IFC Compliance Advisor/Ombudsman (CAO) into impacts on local herders who rely on the region's scarce water resources to survive. While the U.S. vote was not enough to sway the full IFC Board of Directors, which approved the project on February 28, the concerns raised in the U.S. position paper send a strong signal that it is time for the World Bank and IFC to live up to the promise of the Bank's "Turn Down the Heat" report and stop rubberstamping funding for dangerous coal projects.

Today the Sierra Club applauds the U.S. Treasury and hopes that other agencies, including the U.S. Export-Import Bank (Exim), will follow Treasury's leadership and reject financing for Oyu Tolgoi and other dangerous fossil fuel projects.

-- Nicole Ghio, Sierra Club Campaign Liaison

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