Three of the world's largest financial institutions have signed up to a new set of guidelines governing investment in the energy sector, although they have stopped short of halting investment in carbon intensive projects.
Citi, JPMorgan Chase and Morgan Stanley said that they would use the new Carbon Principles to assess the business and regulatory risks associated with investing in electric power projects and provide a framework for negotiating with power firms.
The principles require lenders to encourage power companies to invest in energy efficiency and demand reduction measures and promote renewable and low carbon energy generation. They also commit the banks to continuing to invest in conventional fossil fuel and nuclear power plants, but only where risks associated with changing climate policy are fully considered.
"Leading utilities and financial institutions understand that the rules of the road have changed for coal," said Mark Brownstein, managing director of business partnerships for Environmental Defense, one of the NGOs that advised with the banks in creating the Principles. "These principles are a first step in facilitating an honest assessment of electric generation options in light of the obvious and pressing need to substantially reduce national greenhouse gas pollution."
The announcement comes as the White House again signalled its support for clean coal, nuclear energy and biofuels with the release of its 2009 budget.
The budget, which requires approval from Congress, includes a major funding boost for the US Energy Department with much of the money earmarked for research into nuclear power, clean coal and carbon capture technologies.
Carbon capture power plants are to receive $648m in funding, while research funding in the fields of nuclear physics and basic energy sciences rose 19 per cent to $1.57bn. Biomass and biorefinery projects designed to make cellulosic ethanol also enjoyed increased funding.
However, Democrats criticised the budget pointing to deep cuts in the budget for the government's Low Income Home Energy Assistance Program and a reduction in research funding for hydrogen technology.
Advocates of clean coal are also likely to lament the increase in the funding as a case of too little, too late in the wake of the Department of Energy's controversial decision last week to axe funding for the flagship FutureGen clean coal demonstration project in Illinois.
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