Loans Put on Hold for Coal-Fired Plants

The U.S. Department of Agriculture (USDA) is suspending a major loan program for coal-fired power plants in rural communities, saying the loans are too risky in the face of rising construction costs and uncertainties about climate change. 

James Newby, assistant administrator for the Rural Utilities Branch of the USDA, which is responsible for the loans, said $1.3 billion in loans had been issued for new plant construction since 2001, but none will be given in 2009.

Newby said the costs of construction have been rising by 30% a year, leading the White House’s Office of Management and Budget to ask that new loans be put on hold.

Newby said he believed the government would work through its concerns over the risk of these loans and begin offering them again in 2010.

In the meantime, environmental groups, like Earthjustice, which sued last year to block the loan program, are celebrating a decision that delays the completion of new coal-fired plants before climate change legislation can be put into place.

‘‘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 of Earthjustice. 

According to the AP, at least four utilities were lined up for loans totaling $1.3 billion–for projects in Kentucky, Illinois, Arkansas and Missouri. In addition, a project in Montana was denied funding last month, and projects in Wyoming and Missouri were withdrawn in October. 

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