November 18, 2009

Green technologies will soon get greater export assistance. The U.S. Export-Import Bank is touting its newfound policy, although it is the direct result of a lawsuit filed more than six years ago by environmentalists and cities.

At this point, the agency has provided few details as to how it would achieve its aims. It is now setting up a $250 million lending facility to back green exports as well as to improve the bank's transparency in the tracking and reporting of carbon emissions from projects that it supports. The move, which is part of the settlement reached in February, is not enough, say environmental and civic activists, who add that it does nothing to limit the institution's activities in the area of fossil fuels.

"We want to help American manufacturers produce green technology for the world," says Fred Hochberg, chairman and president of the Ex-Imp Bank. "This common sense approach is good for the environment. It's good for business, and it's good for American workers."

Led by Friends of the Earth, the plaintiffs sued the Ex-Im Bank along with the Overseas Private Investment Corp in 2003. The litigants maintained that the two defendants "illegally" financed the growth of fossil fuel projects over the last decade to the tune of at least $32 billion without ever assessing their affect on global warming. They said that the National Environmental Policy Act required the financing organizations to do just that.

In 2005, a federal judge had found that the participating U.S. cities, which include Boulder, Colo. as well as the California cities of Arcata, Santa Monica and Oakland, had standing under federal law. That position was later supported by the U.S. Supreme Court ruling in the case of Mass. versus the EPA, in which the High Court held that carbon dioxide and other greenhouse gases could be regulated under the Clean Air Act.

Under the agreed upon settlement, the Ex-Im Bank has begun taking carbon dioxide emissions into account in evaluating fossil fuel projects and it has created an organization-wide carbon policy. The Overseas Private Investment Corp. has already established a goal of reducing greenhouse gas emissions associated with projects by 20 percent over the next 10 years. Both agencies will commit to increasing financing for renewable energy.

Friends of the Earth's Michelle Chan says in an email interview that the suit's intent is to force the federal agencies to move away from fossil fuel projects and to furthermore account for the climate impacts in their lending practices. However, she now says the recent Ex-Im Bank announcement is a feeble attempt, saying that it "failed to respond."

"Additionally, Ex-Im Bank supports a large number of transactions of goods and services for the fossil fuel sector that are not associated with identifiable projects, for example, oil and gas drilling and consulting services," adds Doug Norlen of Pacific Environment.

Feeble Effort

While the Ex-Im Bank's green ventures have been growing, they remain a "tiny sliver" of its overall portfolio, says Norlen. Last year, for example, the agency bankrolled about $30 million in renewable projects. But that figure represents less than 2 percent of the $1.6 billion it authorized for fossil fuel lending, he adds.

According to the International Energy Agency's World Energy Outlook, global energy consumption will increase by 1.6 percent a year for the next 20 years. Without meaningful changes, the Paris-based agency says that fossil fuels will account for three-quarters of that growth and that nations will have to spend $500 billion to cut carbon emissions for each year they delay taking action.

The Obama administration has taken a sharp divergence from that of its predecessor and has committed the United States to joining international climate change talks. At a meeting of the world's 20 biggest economies earlier in the year, the current president said that this country would commit to reducing its greenhouse gases.

The Ex-Im Bank's carbon policy is in keeping with the Obama administration's pledge to help create new jobs through promotion of green technology. In recent testimony before Congress, Energy Secretary Steven Chu said that the transition to a carbon-constrained economy will require massive investments in clean energy and that this nation needs to be at the forefront of this unyielding movement.

During the testimony, Chu noted that the United States had built 40 percent of the world's solar cells in the 1990s. Today, however, that market share has fallen to 7 percent. While the lawsuit settlement to which the Ex-Im Bank agreed to finance a greater share of this potential growth is separate from the Obama administration's efforts, the institution does say that it has had environmental procedures in place since 1993.

The lending agency says that it has and will continue to "vigorously" promote the adoption of common environmental standards by other export credit agencies around the world. It says that in the last year it provided a total of $21 billion in export assistance, which is the greatest amount in its 75 year history. Going forward, it has committed to instill "disincentives" for fossil fuel projects.

"We look forward to working with the Export-Import Bank on implementation of their Carbon Policy," says Nancy Sutley, chair of the White House Council on Environmental Quality. "The Board's approval of their Carbon Policy is an important step toward greater transparency and enhanced environmental stewardship."

The Ex-Im Bank's new policy position is part of a broader manifestation and a gradual change in global attitudes. It is another indication that this country is headed into a new era and one that dovetails with the Obama administration's green revolution.

 

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