Without climate protections, the Ex-Im Bank shouldn’t continue

The Export-Import Bank is set to expire on June 30, and concerns for its reauthorization have sparked one of the hottest debates in Congress. In a desperate attempt to reauthorize the agency, some Ex-Im Bank proponents are threatening to change the Bank’s policies in a way that would throw the environment and communities under the bus. In particular, Ex-Im Bank reauthorization legislation proposed by Senators Kirk and Heitkamp and Representative Fincher contains provisions that undercut the Ex-Im Bank’s climate policies. Ongoing House Appropriations Committee provisions by Rep. Hal Rogers also take a hatchet to these policies. Without these climate protections, Ex-Im should not be allowed to continue.

The Export-Import Bank is a federal agency that finances U.S. corporations’ business activities abroad. In recent years, the Ex-Im Bank has financed billions of dollars in harmful extractive and fossil fuel projects that worsen climate change, harm human health and lead to human rights abuses, all while failing to address the energy needs of the poor.

One of the Ex-Im Bank’s few examples of environmental leadership now under attack

Thankfully, in 2013 President Obama acted to minimize some of these abuses when he announced an end to public financing for coal plants abroad, except in limited circumstances. This important step has been useful in persuading multilateral development banks and the trade and development finance agencies of many other countries to adopt similar measures. This progress is a first but essential step for preventing these agencies’ worst climate change impacts.

While this policy applies to the Ex-Im Bank, some members of Congress on both sides of the aisle have repeatedly sought to undermine its implementation through appropriations and authorization legislation. Now, they are trying to hinder this progress by passing legislation to make it easier for the U.S. government to finance harmful coal, oil and gas projects abroad.

Lack of accountability and transparency

Supporting the Ex-Im Bank under Senators Kirk and Heitkamp and Represenative Fincher’s reauthorization legislation and Hal Rogers’ appropriations provision would only worsen the Bank’s already weak accountability and transparency practices.

Civil society organizations have advocated for the Ex-Im Bank to implement an independent accountability mechanism to receive and assess complaints about bank-financed projects that violate agency policies and human rights. Similar mechanisms exist at the Overseas Private Investment Corporation, the World Bank and other public finance institutions. In the absence of such a policy, which it has consistently opposed, the Ex-Im Bank is largely its own judge and jury, arbitrarily rejecting allegations of environmental and human rights policy noncompliance.

Friends of the Earth and other environmental groups delivered petition signatures to the Ex-Im Bank demanding it not finance coal projects in Australia.

What’s more, the Ex-Im Bank refuses to enforce transparency requirements already on the books. The Ex-Im Bank Reauthorization Act of 2006 mandates public disclosure of environmental assessments and environmental reports that project sponsors submit to the Bank.

The Ex-Im Bank does disclose some environmental assessments prior to financing approval for projects when promises of compliance with agency policies are made. However, despite repeated requests by Friends of the Earth and other organizations, the agency has disclosed post-approval monitoring documents for only three of 39 projects subject to this requirement. Disclosure of post-approval monitoring is vital for Congress and the public to ascertain whether projects are complying with the bank’s policies. The Ex-Im Bank’s failure to comply with this most basic transparency requirement is indicative of a deeper and more fundamental failure to ensure projects comply with environmental, social and human rights policies. The current pro-coal reauthorization legislation would only add insult to injury and make it even easier for the Ex-Im Bank to avoid environmental protections.

Examples of past destruction

To understand the kinds of dirty fossil fuel projects that the Kirk-Heitkamp and Fincher bills and related appropriations provisions will encourage, one only needs to look at projects from Ex-Im Bank’s recent past:

• Kusile Coal Power Plant in South Africa: In 2011, the Ex-Im Bank provided $805 million to the Kusile coal-fired power plant in South Africa. If completed, Kusile (below) would be the fourth largest coal plant in the world, roughly ten times the size of a typical coal plant in the U.S. With annual greenhouse gas emissions of 36.8 million tons, Kusile would increase South Africa’s entire energy sector greenhouse gas emissions by 12.8 percent. In addition, the project’s air and water pollution will damage human health while failing to provide affordable energy to the poor.
• Petrobras offshore drilling in Brazil: In 2005, the Ex-Im Bank financed exports to a drilling platform named P-52, one of the world’s largest offshore drilling rigs, operating in deepwater 80 miles offshore Brazil’s Atlantic coast by the state energy giant, Petrobras. The P-52 platform is now at the center of a scandal allegedly involving over $3 billion in bribes.
• Fossil fuel projects inside the Great Barrier Reef World Heritage Area: In 2012, the Bank provided nearly $5 billion in financing for two enormous liquefied natural gas export plants inside the world-famous Great Barrier Reef World Heritage Area. The projects threaten sea turtles, dugongs and many other rare and protected marine species, as well as the Great Barrier Reef itself.
• Deadly LNG project in Papua New Guinea: In 2009, the Ex-Im Bank provided a $3 billion loan for the Papua New Guinea Liquefied Natural Gas project. PNG LNG — led by an ExxonMobil subsidiary — has sliced gas pipelines through priceless tropical forests and sparked violent conflicts with tribal communities that were shoved aside to make way for the project.

The Kusile Power Station, under construction in South Africa.

Despite this, neither the agency nor pending Congressional legislation has addressed these concerns. Congressional leadership is not allowing a vote on alternative bills without these harmful provisions because many members of Congress on both sides of the aisle are intent on passing bills that promote even more harmful projects. Given the negative climate, environmental, social and human rights impacts of these projects, these reauthorization and appropriations bills should not become law.

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We cannot let Congress wreak environmental havoc by encouraging harmful public financing.

Tell your senators that you won’t stand for them putting polluters over environmental protection.

Image credit: Kusile Power Station, Wikimedia Commons