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Ex-Im bank should build jobs through clean energy

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"Ex-Im bank should build jobs through clean energy"

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Export-Import Bank need not reconsider recent coal decision

Last week, the U.S. Export-Import Bank announced that they would not provide a loan guarantee to an Indian company that would help them buy $600 million of American-made coal-mining equipment.  The decision was based on the fact that the purchase would lead to massive greenhouse gas emissions, which goes against new Bank policy.

On Wednesday, under pressure from the National Association of Manufacturers and other fossil fuel industry supporters, the Bank agreed to reconsider its decision to not provide the financing assistance.  By agreeing to reconsider the decision, the Bank has taken a step backwards, but not nearly as big a step backwards as it would be to reverse the decision.  CAP’s Richard Caperton and Sean Pool have the story

In our report “Development Funding Done Right,” the Center for American Progress suggested that the U.S. government should require multilateral development banks – such as the World Bank – to consider the greenhouse gas emissions in economic analyses of all energy projects.  Our reasoning also applies to export finance institutions like the Export-Import Bank, especially since the Bank adopted a carbon policy in 2009.  This policy makes it clear that the Bank should hold carbon-intensive projects to a very high standard in all financing decisions.

The Bank ultimately decided that the Indian project did not meet those high standards.  Supporters of the project claim that the Bank’s decision harms American workers without doing anything to reduce greenhouse gas emissions, since the project will likely buy the mining equipment from another country. However, this argument mistakenly presumes that the Bank won’t find another job-creating, carbon-reducing project to support.

As a taxpayer-supported entity, the Ex-Im bank has a responsibility not just to look out for the wellbeing of any one particular project and the jobs it would create in the short term, but rather to ensure that the US remains competitive in emerging industries that have the potential to create even more jobs in the long run. CAP’s report, Out of the Running, and a more recent by the World Wildlife Foundation report have highlighted how the race to dominate the clean energy export markets is already underway -and the US is falling behind.

Ensuring that the Bank’s financing assistance helps drive demand for the domestically-produced clean energy technologies of the future instead of the incumbent dirty energy systems of the past will create jobs, grow clean energy industries, and drive long term economic growth. The Bank already has an active Environmental Exports Program that can provide financial assistance to clean energy exports, and the government also provides tax incentives for clean energy manufacturing through the Advanced Energy Manufacturing Credit. But these programs are just the beginning. The Bank has the potential to be a major boon to US-manufacturers in job-rich clean energy industries by proactively seeking to link latent production capacity at home with strong overseas markets where demand is strong. By shifting its focus away from dirty energy industries that are already shrinking and toward the clean energy technologies that will create jobs in the 21st century, the Bank is taking an important step towards fulfilling this potential.

The opponents of the Bank’s decision on the Indian coal project are right: the Bank should work to create jobs.  But, they’re wrong that the best way to create jobs is in the fossil fuel industry.  Instead, the Bank should follow its own carbon policies and use its clean energy financing programs to create sustainable jobs for the clean energy economy.

Richard Caperton, Energy Policy Analyst, and Sean Pool, Special Assistant for Energy Policy at the Center for American Progress.

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2 Responses to Ex-Im bank should build jobs through clean energy

  1. mike roddy says:

    Important post, thanks. Let’s hope that Eximbank’s agreement to review their decision was just political. Given the charge to take carbon into consideration in their funding, it would be difficult to imagine how a reversal could be justified.

    The notion of taking emissions into consideration in financing needs to become real with the World Bank and IMF. Their recent funding of giant coal plants in India and South Africa was unacceptable, in spite of the excuses they gave in their public announcements.

    As Richard and Sean pointed out, it’s a question of opportunity capital as well. Funding that is withheld from fossil fuel power is more likely to become available for renewable energy projects, employing wind, solar, or geothermal power. This could not only enable large scale clean energy projects, it would be a powerful market signal to private lenders.

  2. fj2 says:

    Excellent.

    Clean energy financing problems should not only include technologies such as solar and wind but broad transport ventures based on bicycle technology and derivates which have 1% the environmental footprint of transportation systems based on cars on the per-vehicle-basis and many times less than 1% for the wasteful and extremely destructive infrastructure required by automobiles.