Ex-Im Bank: New Dirty, Controversial Coal Plant? Where Do We Sign Up?

by Justin Guay and Nicole Ghio, via the Sierra Club

Continuing its efforts under Chairman Fred Hochberg to direct as much U.S. taxpayer money as possible to dirty climate destroying coal projects with devastating social and environmental impacts, the U.S. Export-Import Bank (Exim) Board of Directors discussed financing the controversial Oyu Tolgoi gold and copper mine in Mongolia at its meeting last week.

This is the very same project the World Bank Group is already under heavy criticism for considering.

But wait, you say, that doesn’t sound like a coal plant…

That’s what the World Bank, and Ex-Im Bank, would like you to believe. But tucked into the investor agreement is a requirement to construct a new 750 MW coal-fired plant to power the mine after four years. But since the coal plant is an “associated facility,” the World Bank didn’t bother to follow its coal policies. Instead it failed to convene an expert panel to screen the project because they might realize that low carbon alternatives exist. You know, like when the New York Times highlighted this very same project as ripe for wind development.

Civil society is rightfully quite angry at the World Bank. Not only for this blatant attempt to avoid the rules, but because the project is already facing a complaint from local herders whose access to clean water, livelihoods, and culture are endangered by the project.

But alas, like a moth drawn to a flame, Ex-Im appears eager to use Oyu Tolgoi to increase its already outrageous fossil fuel portfolio. The internal thought process from Ex Im Bank President Fred Hochberg may have gone something like this: “New climate destroying coal plant needs finance; where? How much? Climate be damned, we’re happy to do it!”Why are we so rough on the guy? Take a look at his institution’s record-breaking fossil fuel portfolio. While the U.S. State Department is at the Climate Negotiations in Doha this week touting the $2.3 billion in fast-start finance it claims to have provided developing countries to combat climate change, Ex-Im provided $10.4 billion in financing for fossil fuel projects in 2012 alone. All of that finance despite having a “low-carbon” policy. Right.

So take a moment today to tweet at Fred Hochberg (@FredHochberg) and Exim (@EximBankUS) and let them know that they should help grow clean, renewable energy instead of using our tax dollars to wade into yet another heaping pile of coal. Tell them it’s courtesy of us @Sierra_Club.

Justin Guay is with Sierra Club International; Nicole Ghio is a Sierra Club Campaign Liaison.


9 Responses to Ex-Im Bank: New Dirty, Controversial Coal Plant? Where Do We Sign Up?

  1. Mike Roddy says:

    Thanks to Justin and Nicole for this story, as well as for your direct and passionate language.

    You should assume that Hochberg is not persuadable, since if he changes course he would have to admit a failed career, and one that causes death and destruction. Better to approach Eximbank’s Board, and ask your Congressman to open an investigation into their lending practices.

    As things stand now, Eximbank might as well be a branch of the American Petroleum Institute. The oil companies have penetrated every other branch of government, so this would not be a surprise.

  2. Bob M says:

    A typical case of first-worlders getting their danders up over a situation they don’t understand or want to take the time to understand.

    1) “Ripe for wind development” means up to 20% of the areas power can be provided by wind. When the wind isn’t blowing, the mine can’t shut down.
    2) The mine is an important source of wealth for a country where 1/3 of its inhabitants live in poverty.
    3) Most of the area’s pollution comes from residents burning raw coal. In this case, a coal plant with any kind of particulate filtration will be an improvement.
    4) 750MW is a small coal plant. People are right now furiously emailing Fred Hochberg on iPads charged by domestic coal plants 3x that size.

    Americans use 25% of the world’s power, but have 3% of its population. Denying a tiny, impoverished enclave electricity because it’s not clean enough for our standards is pretty pathetic.

  3. It seems to me that there is a lot of people ” getting their danders up over a situation they don’t understand or want to take the time to understand.” It is necessary to look at this in the context of reducing coal use world wide. In most cases it is possible to substitute a sustainable technology for coal use to produce the same amount of energy. The only problem is that it results in many small projects rather than the mega-scale projects that the EX-IM Bank knows how to control.

    Just as countries in Africa and Asia have been able to avoid the costs of a land-line telephone network by using cellular technologies, we can avoid both the real physical costs of installing soon-to-be-antiquated coal plants by installing resilient sustainable systems now.

  4. Mike Roddy says:

    Your concern about the world’s impoverished people does not ring true. I worked with Exim in my old company, and they were mostly concerned with export markets for US made products and services. To keep overhead down, they liked huge projects such as cement and power plants, not the low cost housing that I was providing.

    Besides, Mongolians also would be breathing the mercury and SOx coming from this 750 MGW plant, which you describe as “small”. Yeah, maybe compared to the Tata plant in India, or the WB monster in South Africa.

    Mongolian pasture culture is also going to suffer from global warming, as native plants see extreme weather and changes in temperature and the water cycle.

    We need to close coal plants, as well as stop building them. Do some homework about our global warming problem, and spare us the concern for poor people. Exim works for corporations, including the big fossil fuel ones.

  5. Justin Guay says:

    Bob just a few corrections here.

    – 750 MW is not a small coal plant. US average is 500 MW. You also forget coal use is in serious decline in US. Lowest point in the past 30 + years

    – This is a captive coal plant – none of the electricity produced goes to the grid. So pitting this as ‘first worlders denying the poor electricity’ is simply not the case

    – You ever heard of the World Bank’s Extractive Industries Review? The report concluded that fossil fuel and mining projects do not alleviate poverty, and recommended that World Bank involvement with these sectors be phased out by 2008 to be replaced by investment in renewable energy and clean energy.

    Unfortunately this development model is not working and it’s destroying the planet. Time for a better way.

  6. Bob M says:

    Wesley, it’s easy for Americans sitting at their computers to say it’s “necessary to look at this in the context of reducing coal use world wide”, but that means nothing to Mongolians who are living in truly desperate conditions. What’s going to back up the plant when the wind dies, or the sun goes down? What’s going to supply the other 80% of the power required to run the plant? At this moment Mongolia is in the process of connecting to the Chinese grid, for which they will pay a premium for power with money leaving their own economy. And what’s powering the Chinese grid? Coal, of course. The only thing denying Mongolia help in building this plant will accomplish is to send their money over the border into China.

  7. Bob M says:

    Justin, coal accounted for 42% of electricity generation in the US in 2011. It is declining in favor of natural gas, which is less carbon-intensive but involves fracking and associated problems. Renewables made up 13% of electical generation, with hydro providing the lion’s share. Wind provided a scant 3.3% of our power and solar a fraction of 1%. To assume that renewables sans hydro (it’s in the Gobi desert) can power the plant or the region is beyond unrealistic.

    I’m not sure what you mean by a “captive” coal plant, but there was no grid at all in neighboring towns like Khanbogd before the mine came:

    “Electricity is now available to households for set periods throughout the day, and the mine has promised residents 24-hour electricity soon. Still, life is harsh for many here, with no running water and only five doctors working at the town’s small, one-story hospital, the same number as before the influx of people.

    ‘We are looking at the moment at how we can help develop Khanbogd town so it is something better than it currently is, and somewhere where it is attractive for our employees to live,’ Mr. McRae said.”

    So it is very much a case of denying people basic resources that you and I take for granted.

    Actually, I’m quite familiar with the Extractive Industries Review, and it says pretty much exactly the opposite of what you claim it does:

    “The WBG’s role in EI must be focused on poverty reduction and attainment of the MDGs. By producing and exporting oil, coal, or other EI products, many poor countries can generate crucial revenues for economic development. More than 50 WBG client countries have significant EI sectors that generate important revenues to governments. In other countries, EI may be relatively less significant, but they are still capable of making a valuable contribution at the local or national level. In addition, EI can contribute to community welfare and development in a number of ways.”$FILE/finaleirmanagementresponse.pdf

    I will agree with you on one point: it is time for a better way. Unfortunately there isn’t one. Until there is, or maybe when Americans use only twice as much energy as the global average (instead of 5x), it’s the height of hypocrisy to ask the world’s poor to clean up the mess we’ve made.

  8. Bob M says:

    Mike, Mongolians in the area are breathing far more mercury and SOX from their own raw coal fires than they would be from a coal plant that’s providing them with electricity:

    “Around 3 billion people still cook and heat their homes using solid fuels in open fires and leaky stoves. About 2.7 billion burn biomass (wood, animal dung, crop waste) and a further 0.4 billion use coal. Most are poor, and live in developing countries.

    Such cooking and heating produces high levels of indoor air pollution with a range of health-damaging pollutants, including small soot particles that penetrate deep into the lungs. In poorly ventilated dwellings, indoor smoke can be 100 times higher than acceptable levels for small particles. Exposure is particularly high among women and young children, who spend the most time near the domestic hearth.

    Nearly 2 million people a year die prematurely from illness attributable to indoor air pollution due to solid fuel use…”

    The state-supported Oyu Tolgoi mine is the biggest public works project in Mongolian history. It will allow hundreds of thousands to have running water, electricity, and decent health care for the first time. Unless you can offer a suitable alternative which doesn’t trap others in poverty, “we need to close coal plants” is a simplistic, feelgood notion that merely shifts our burden onto people who are far less equipped to deal with it. It solves absolutely nothing.

  9. A Siegel says:

    Hmmm … Carol Browner was named to ExIm’s Board in November. Perhaps she would give some comments re the Bank’s coal investments.

    Carol Browner
    Date added:November 19, 2012
    Submission Type:Board of Directors
    Name of board:Export-Import Bank of the United States
    Position on board:member to the Bank’s Advisory Committee
    Current employer:Albright Stonebridge Group and Center for American Progress