The once routine renewal of the Export-Import Bank of the United States is now a time-sensitive political battle within the Republican Party with energy interests in the balance.
The nuclear industry is particularly keen on seeing the Ex-Im Bank’s charter survive beyond this month. With few reactors being built at home, industry leaders want the bank to keep financing projects abroad and spurring U.S. technology exports.
Westinghouse Electric Co. LLC and General Electric Co. are among the companies pressing lawmakers to put aside their differences and reauthorize the bank.
But they are getting pushback from the more conservative factions of the Republican caucus, including House Financial Services Chairman Jeb Hensarling (R-Texas) and House Majority Leader Kevin McCarthy (R-Calif.).
Speaking at an event hosted by the Nuclear Energy Institute and The Hill newspaper yesterday, Rep. Adam Kinzinger (R-Ill.) said he doesn’t understand Hensarling’s opposition, and that it would be "devastating" for manufacturing districts like his if the Ex-Im Bank were allowed to lapse.
Kinzinger’s Illinois 16th District has four nuclear plants and is a hub for the manufacturing of nuclear exports. On the Senate side, Ex-Im champion Maria Cantwell (D-Wash.) is keen on exports from Boeing Co., with manufacturing in her state.
Westinghouse CEO Danny Roderick warned yesterday that without the bank, his company’s billion-dollar deal to build reactors in Poland could go to the French, putting 50,000 U.S. jobs at risk.
Similar deals are in the works in Mexico, South America, the United Kingdom, Bulgaria and Kazakhstan. "We would be the only industrialized country in the world that does not have an export-import bank," Roderick said at the NEI event.
The domestic slump has fueled the industry’s desire to tap into foreign markets. Today, there are more than 70 new reactors under construction around the world but only five in the United States.
Daniel Lipman, NEI’s vice president of suppliers and international programs, told the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation and Trade last month that the export of up to 15 new reactors could hinge on the Ex-Im Bank’s existence.
At about $3 billion to $5 billion per plant, the projects represent up to $75 billion in exports that need the bank’s support, he said.
"The total value of the nuclear energy campaigns under management is $234 billion, with $62 billion in U.S. export content," Lipman told lawmakers. "If U.S. companies achieve a modest share of this market, they will contribute billions of dollars to U.S. exports and support tens of thousands of high-paying American jobs."
Speaking about his party’s fight over the bank, Kinzinger said, "I’m OK to talk about some of the squabbles in the family. I have no idea why the sort-of far right have made this their hill to die on."
‘Crony capitalism’
The conservative group Heritage Action for America has been a leader in the effort to kill the Ex-Im Bank, saying it’s corporate welfare that helps a small percentage of businesses.
CEO Mike Needham said in a tweet yesterday that 98 percent of exporters "operate without the Ex-Im Bank, so why do Boeing and GE need it so badly?"
In another tweet, he said, "We must ensure opportunity for all and favoritism for none, the Ex-Im Bank is crony capitalism at its worst."
Kinzinger’s response: "This idea of crony capitalism that you hear … you know, it’s fine, let’s make some fixes and do what we need to do, but we cannot unilaterally disarm the world stage."
Several bills have been floating around Capitol Hill to reauthorize and reform the bank. Sens. Mark Kirk (R-Ill.) and Heidi Heitkamp (D-N.D.) have S. 819, Sen. Jeanne Shaheen (D-Maine) has S. 824, Rep. Stephen Fincher (R-Tenn.) has H.R. 597, and Rep. Maxine Waters (D-Calif.) has H.R. 1031.
There’s been some progress on those bills. The Senate Banking Committee held a hearing on the bank yesterday. Hensarling’s Financial Services panel will have one today. And if reauthorization doesn’t pass through regular order, backers are hopeful of inclusion in another measure.
Perhaps that’s why Needham tweeted: "Cronyism thrives not on floor debate, but in the back rooms of Congress. It’s time to #EndExIm."
Michael Boyle, CEO of Boyle Energy Services & Technology Inc., said he has used the Ex-Im Bank for years to back his firm’s line of credit when conducting foreign transactions and for insurance.
"We left it once to work with private market insurers at lower cost and greater coverage," Boyle said. "After testing that market over several years, we found the Ex-Im product and customer service to be far better and worth the greater cost."
Boyle, whose company serves large power producers globally, said Ex-Im has helped increase his revenues and employment. "I am a strong believer that as a small business export incubator, there is no better tool in the U.S. government or available in the private sector," he said.
Coal
Coal’s strained relationship with the Export-Import Bank stems from President Obama’s efforts to cut funding for overseas power plant projects that don’t include technology to significantly reduce carbon emissions.
In 2013, Ex-Im’s board approved adding such a restriction to its lending guidelines. The White House not only welcomed the move but has been encouraging countries around the world to follow suit.
But it didn’t take long for pro-coal lawmakers to insert a rider in a must-pass spending bill rolling back the bank’s new policy. It has remained in place ever since.
Now Republican-led reauthorization measures include provisions attacking the Ex-Im Bank’s coal power plant policy altogether. Kirk’s would prohibit lending discrimination, while Fincher’s would adopt the existing spending bill rider.
"I strongly support coal fuel-based technology and would like to see it part of the bank’s support," said Boyle. "It would then be left up to global markets to determine if coal use for generation is right for the local end use."
While the administration sees funding restrictions as a way to push cleaner power generation, critics say the policy ignores global energy needs and leaves out other technologies that can improve coal burning overseas.
"I would like to see advanced clean coal technology as part of that export, consistent with its use in the U.S.," said Boyle, saying it’s "very clear this administration is focused on renewable technology as a priority to the exclusion of coal."
That’s exactly what environmental groups want to see, not only from the administration but from other countries with export and development banks.
"The markets and the public have made it more than clear that clean energy is up to the task of powering our world, and it’s time that the Ex-Im Bank reflect that," said John Coequyt, director of the Sierra Club’s International Climate Program, referring to the global coal market downturn.
Yesterday, the Natural Resources Defense Council, Oil Change International and the World Wildlife Fund released a report calling on governments and global lending institutions to end their financing of overseas coal projects.
The report says coal received more than $73 billion in aid between 2007 and 2014 from export credit agencies like Ex-Im, state-owned banks and development agencies.
"This funding is being provided by a handful of countries that continue to resist pressure to end this public financing," the report says. "Japan, Korea and Australia are leading the opposition to limits on coal finance in international discussions."
