Environmental Groups To Dems: No Coal In Ex-Im Reauthorization

Senate Majority Leader Harry Reid of Nev., speaks to reporters following a Democratic luncheon on Capitol Hill in Washington, Tuesday, July 8, 2014. (AP Photo/Susan Walsh)
Senate Majority Leader Harry Reid of Nev., speaks to reporters following a Democratic luncheon on Capitol Hill in Washington, Tuesday, July 8, 2014. (AP Photo/Susan Walsh)

WASHINGTON -- Congress is tied up in a debate over whether or not to reauthorize funding for a federal agency that most people have never heard of -- the Export-Import Bank. One of the biggest sticking points might end up being the bank's policy on financing coal-fired power plants abroad.

The purpose of the Export-Import Bank, or Ex-Im, is to promote the export of American goods and services by providing loans to projects overseas that will make use of them. Sen. Joe Manchin (D-W.Va.) wants to attach an amendment blocking a policy issued by the bank last year that bars funding for most coal plants. On Thursday, the Sierra Club, Greenpeace and Friends of the Earth said they would inform lawmakers of their opposition to the reauthorization bill if it comes with Manchin's pro-coal language.

The Sierra Club is calling for "no dirty reauthorization," said Justin Guay, associate director of the international climate program at the Sierra Club. The groups plan to send a letter on Thursday to Senate Democrats and to President Barack Obama, urging them not to sign off on reauthorization if it include Manchin's measure.

Senate Majority Leader Harry Reid told Bloomberg BNA Thursday that he is working to reach a compromise between Manchin and Democrats who oppose his measure.

The hard line from environmental groups is likely to put a number of Democrats in a tough spot. The party has stood pretty solidly behind reauthorization for the bank, while Republicans, especially in the House, want to let its funding expire.

But the change on financing coal projects is a key part of the Obama administration's broader climate action plan. In his big climate speech in June 2013, Obama called for an end to financing for coal plants that don't have carbon capture technology, and the Treasury Department last year updated its policies to abide by that pledge.

Environmental groups have criticized Ex-Im for years for funding a number of projects with major environmental impacts, such as coal-fired power plants, mines, pipelines and natural gas export terminals. That includes an $805 million loan for a massive coal-fired power plant in South Africa in 2011 and a $3 billion loan for an ExxonMobil liquefied natural gas project in Papua New Guinea in 2009.

Environmental groups welcomed the change in Ex-Im's policy, which was announced last December, even if it only addressed coal-fired power plants. (It did not address funding for coal mines or other fossil fuel projects.)

Environmental groups are frustrated that, rather than using the reauthorization process to reform Ex-Im's lending policies, Congress appears likely to reverse what little progress the bank has made.

The group Pacific Environment has tracked Ex-Im's investments over the years, and found that the bank provided nearly $10.5 billion in loans for fossil fuel projects in 2012, nearly double the amount it provided in 2011. At the same time, the group found that Ex-Im's funding for renewable energy projects dropped.

Pacific Environment has called Ex-Im the "world’s largest sources of public financing for fossil fuel projects located outside the U.S." The bank continued to provide funding for coal projects even after instating a carbon policy in 2009 that it said would "guide its support of United States exports in light of climate change concerns."

Other recent loans have included $2.95 billion for the Australia Pacific Liquefied Natural Gas project in May 2012, which includes gas drilling and construction of a pipeline, production facility and terminal, and a $1.8 billion loan for the Queensland Curtis LNG project in December 2012. Environmental groups say the projects would imperil the Great Barrier Reef, a World Heritage Area, and have sued Ex-Im over those loans.

Despite the new rules on coal, which prohibit loans except in cases where there are no financially feasible alternatives or if the plant would include carbon capture technology, Ex-Im indicated last week that it is considering funding a major coal project in India that includes a 3,960 megawatt power plant and mine. An Ex-Im official told Reuters that it is "currently reviewing the application" to evaluate if it meets its criteria.

"It's a laundry list of the dirtiest and nastiest projects imaginable, and Dems are trying to line up as a coherent bloc to say the bank is a really exemplary source of U.S. jobs and technology overseas," said Sierra Club's Guay. "It's total insanity."

UPDATE: July 11 -- The groups provided HuffPost with a copy of the letter sent to Senate Democrats and Obama on Friday, which you can read here. Nine other groups, including the Natural Resources Defense Council and the Center for Biological Diversity, also signed on.

This article has also been updated to include additional examples of Ex-Im loans.

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