"The federal government is suspending a major loan program for coal-fired power plants in rural communities, saying the uncertainties of climate change and rising construction costs make the loans too risky.
After issuing $1.3 billion in loans for new plant construction since 2001, none will be issued this year and likely none in 2009, James Newby, assistant administrator for the Rural Utilities Service, a branch of the Department of Agriculture, said Tuesday.
The program's suspension marks a dramatic reversal of a once-reliable source of new coal plant financing. It follows the announcement last month that several major banks will require plant developers to factor in climate change when seeking private funding.
"This is a big decision. It says new coal plants can't go to the federal government for money at least for the next couple years, and these are critical times for companies to get these plants built," said Abigail Dillen with the environmental law group Earthjustice. The group filed a federal lawsuit last year seeking to block the loan program."
See also: USDA Rural Development's Electric Programs Via::EarthJustice AND Omaha World-Herald, "Loans Program for Coal Plants Suspended" Image credit:: Next Big Future; "1.58GW coal plant near Laughlin, Nevada"