The Export-Import Bank of the United States (Ex-Im Bank) has distributed a detailed implementation plan to stakeholders for its carbon policy, released in November last year, but environmental groups are criticizing the plan that could open the door for financing high-carbon intensity projects such as coal-fired power plants, reports Environmental Finance.
Under the carbon policy, which was seen by Environmental Finance, the Export Credit Agency (ECA) will allow “exposure fees” associated with loans for renewable energy projects to be paid over the lifetime of the loan, and will encourage other countries’ ECAs to adopt similar policies to create a level playing field. The plan also calls for the OECD to expand financing incentives to low-carbon projects and restrict financing to high-carbon intensity projects.
The centerpiece of the policy is a $250 million loan guarantee program for renewable energy projects, which is said to be the first of its kind among export credit agencies, reports the New York Times.
Three environmental NGOs told Environmental Finance that the plan would allow coal-fired power plants to receive financing from the ECA by purchasing offsets to reduce the project’s CO2 intensity, and thus encourage more of these projects. However, Environmental Finance reported that Ex-Im has not financed a coal-fired power station in the last decade.
However, the New York Times reports that the carbon policy is part of a 2009 settlement that resolves a lawsuit alleging that the agency provided more than $32 billion to fossil fuel projects without considering the impacts of global warming under the National Environmental Policy Act (NEPA).
Many environmentalists say that global lending institutions including Ex-Im Bank and the World Bank are failing to make changes to move from dirty fuel to zero- and low-carbon energy development, reports the New York Times.
Ex-Im Bank told the New York Times that its mission is to create and sustain U.S. jobs by helping finance U.S. exports and it can’t “unilaterally stop” supporting fossil fuel projects because it will shift the jobs to other countries. As a result, the agency has created disincentives to discourage higher-emission projects.
In 2009, the Ex-Im Bank approved $101 million in transactions in support of U.S. renewable energy exports, up from $30.4 million the previous year, although much lower than the $1.06 billion that went toward five new fossil-fuel power plants, and nearly $1.5 billion to support oil-field and gas-field projects, reports the New York Times.
As Ex-Im Bank released its carbon policy, the Center for Biological Diversity, Pacific Environment and Turtle Island Restoration Network said it plans to sue the agency for financing a liquefied natural gas (LNG) project in Papua New Guinea without analyzing its environmental impacts, reports Clean Skies.
Ex-Im provided $3 billion to ExxonMobil and its partners for the project.
The groups say the LNG project will produce 3 million tons of carbon dioxide a year and could harm endangered wildlife and habitats. The LNG project is expected to be the largest industrial development in Papua New Guinea.
Ex-Im Bank has 60 days to correct the violations before the conservation groups file suit in federal court, according to the article.