Lawmakers warn Export-Import Bank against fueling ‘climate chaos’

The bank is expected to decide Thursday whether to finance an oil and gas project in the Middle East.

March 14, 2024

Six lawmakers expressed opposition to potential U.S. investments in a Bahrain oil and gas project that they say would harm the climate and undermine a pledge by President Joe Biden to end public financing of overseas fossil fuel developments.

In a letter led by Sen. Jeff Merkley (D-Ore.) and sent to the board of directors of the U.S. Export-Import Bank on Wednesday, the officials urged the agency not to move forward with financing the project “because of its negative impacts on the climate.”

“The Bahrain oil and gas expansion project would be just the most recent instance of the Export-Import Bank of the United States (EXIM) financing a project that runs counter to Biden Administration’s climate change policy and President Biden’s climate directive,” the letter states.

The Export-Import Bank is expected to decide Thursday whether to approve financing for the Bahrain project, in what the White House has said would be a move in opposition to Biden's climate goals. A 2021 executive order calls on agencies, including EXIM, to find ways to stop funding fossil fuel-based energy overseas. Later that year, at global climate talks, the U.S. pledged to end new public finance for the international fossil fuel energy sector by the end of 2022.

Despite that pledge, EXIM approved more than $900 million in oil- and gas-related projects in 2023, including $100 million for an oil refinery in Indonesia and support for natural gas turbines in Iraq. The fossil fuel investments have raised concern that the bank is ignoring the advice of a panel of climate experts that EXIM created at the Biden administration’s behest. The agency's main focus is to promote U.S. exports and generate American jobs.

EXIM notified Congress in early February that it intended to provide finance for the oil and gas expansion project, a requirement for investments that exceed $100 million. The exact amount of funding and the number of jobs created won't be made public until after the board votes to approve it.

The letter also raises concerns that EXIM is providing fossil fuel financing “despite Congress being clear that environmental impacts should be a determinative part of its project evaluation.” When Congress reauthorized the bank’s charter in 2019, it was explicit that EXIM’s board was permitted “to withhold financing from a project for environmental reasons,” the letter adds. In addition to Merkley, it was also signed by Sens. Bernie Sanders (I-Vt.), Peter Welch (D-Vt.) and Ed Markey (D-Mass.) and Democratic Reps. Jared Huffman and Ro Khanna, both of California.

EXIM spokesperson Elizabeth Lewis said the agency seeks to align its financing with the administration’s climate agenda, while complying with statutory requirements preventing it from discriminating against industries like the oil and gas sector.

“EXIM staff performs a full due diligence review of transactions according to the agency’s statutory and policy requirements, including a feasibility review and alignment with EXIM’s environmental and social due diligence procedures and guidelines,” Lewis said in an email. “If a transaction satisfies all EXIM eligibility criteria, the agency is prevented from discriminating against deals solely on the basis of industry, sector or business.”

The lawmakers argued in their letter that the provision doesn’t prevent EXIM from considering a project’s environmental impacts and that interpreting it too broadly “would functionally render EXIM’s environmental policies and procedures null and void for the greatest environmental challenge the world has ever faced.”

The Bahrain project would involve drilling hundreds of new oil and gas wells in the central and southern part of the country, a major oil and gas producer in the Middle East. The oil field is operated by a subsidiary of Bahrain’s Oil and Gas Holding.

The project’s total carbon emissions would be 1.4 million metric tons by 2026, according to an environmental impact assessment released in February 2023.

The lawmakers called that assessment “woefully inadequate." The letter also draws attention to recent reporting, including by E&E News, that a climate advisory committee formed at the urging of the White House had been sidelined.

“This is deeply troubling and signals that EXIM is not serious about considering climate chaos in its financing decisions, nor following its congressionally mandated directive to consider environmental impacts,” the letter states. “We cannot afford to have EXIM undermine domestic and international climate progress by financing projects that worsen this crisis.”


By:  Sara Schonhardt
Source: ClimateWire