CLIMATE

Ex-Im Bank's carbon proposal fails to quell enviros' concerns

A federal bank that provides billions of dollars for overseas energy projects has drafted plans to integrate climate change into its financing decisions, but environmentalists say the emerging proposal is weak because it lacks commitments to curb overall emissions of greenhouse gases.

The Export-Import Bank of the United States' move toward a carbon policy is part of a February settlement with Friends of the Earth, Greenpeace and cities that sued the export-credit agency in 2002 over its support for oil and gas, refining, and fossil-power projects (E&ENews PM, Feb. 6).

The bank provides loans, loan guarantees and insurance to spur export of U.S. goods and services to foreign markets.

A draft of the policy obtained by E&E commits the bank to several steps to implement the settlement of the federal lawsuit.

"The Carbon Policy is based on a set of principles that address measures to encourage energy-related exports that produce little or no CO2, or that result in reduced CO2 emissions, while also encouraging the adoption of mitigation measures for fossil fuel projects," the Aug. 5 draft says.

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The plan says the bank will "intensify" promotion of export-credit support for renewable energy projects. The centerpiece of the renewables plan is a $250 million loan guarantee program, and the bank plans to identify incentives and "programmatic changes" that spur renewable projects.

It also calls for increased promotion of energy efficiency-related exports, including encouragement for foreign buyers to seek "commercially viable technology to reduce the carbon footprint of fossil fuel projects while maintaining the competitiveness of U.S. exporters."

In addition, the plan says the bank will improve tracking of emissions from projects it supports. The document also contains a blueprint for implementing the effort, such as adopting mitigation and offset measures that are commercially viable and part of accepted banking practices.

The bank would also consider the financial implications of CO2-based revenues and costs in its financial analysis of fossil projects, the draft states.

But some groups that are part of a delegation created under the settlement to work with the bank want the agency to go back to the drawing board.

"This policy will do nothing to slow or reverse these emissions. This policy has no provisions for capping or curtailing portfolio greenhouse gas emissions for Ex-Im Bank-financed projects," said Doug Norlen, policy director for the group Pacific Environment.

The bank did not provide responses to questions about the draft policy at press time.

The plan is being developed at a time when Obama administration officials are pledging to work with other major economic powers to curtail fossil energy subsidies -- an issue Obama highlighted in a major climate change speech today at the United Nations (see related story).

"Later this week, I will work with my colleagues at the G-20 to phase out fossil fuel subsidies so that we can better address our climate challenge," Obama said.

Stephen Kretzmann, executive director of the group Oil Change International, called the Ex-Im proposal at odds with the administration's calls for eliminating subsidies.

"They are not actually committing to phasing out support for fossil fuels. They don't seem to be open to that alternative, which is exactly what the administration is saying they want to put on the table at the G-20 this week," Kretzmann said. "It may be that the Ex-Im Bank just hasn't gotten the memo about fossil fuel subsidies."

Ex-Im Bank support for renewable energy projects has been on the upswing in recent years, according to the bank's annual reports. The 2008 report says the bank authorized $30.4 million in financing, compared to $2.7 million in fiscal 2007, $9.8 million in fiscal 2006 and $16.8 million in fiscal 2005.

However, the amount remains small compared to support for oil and gas and fossil-fueled power projects and services. In fiscal 2008, the bank authorized $1.5 billion in support for oil and gas projects, according to the annual report.

More recently, in May, the bank announced plans to provide Brazil's state-owned oil company Petrobras a $2 billion credit line to help develop its offshore reserves and upgrade its refining system. The bank estimates the financing will support $2.2 billion worth of U.S. goods and services exports for the oil development.

Click here to read a draft of the policy.

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