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.